Guarranted Credit Redemption. | Loan consolidationOn August 22, 2019 by Joel Simmons
The repurchase of credit consists of passing its current loans to another bank or financial institution to obtain different credit conditions. It is usually a question of lengthening the repayment period to have smaller monthly payments, but other conditions exist according to the indebtedness situation of each one.
How to obtain a guarantee for a credit?
If you want to avoid getting your home in case of non-repayment, you do not mortgage on your house. But let’s take a second of the lender instead: for him, if you do not have enough confidence in the future, that you have a doubt about your ability to repay your loan, how can he lend you money? all confidence?
Mortgage credit is therefore a loan of money with a mortgage. In order to establish a mortgage, one must do a notarial deed , go through a notary, and make an entry in the mortgage office. This operation is expensive, which reserves the mortgage for loans of large sums of money: we usually talk about real estate purchases.
Precariousness and mortgage
Unlike in the old days, over-indebtedness commissions take into account homeowners. Their dwelling can no longer be considered as a seizable property like any other. Housing is a fundamental right, and it is very difficult in France to dislodge someone, even if he does not pay back his loans: this is one more reason to be less afraid of mortgage credit. This credit buy-back is suitable for the unemployed , those who have no stable income, housing being the main guarantee given, before the remuneration. At RSA, it’s better not to believe it too much.
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The purchase of mortgage credit in practice
The purchase of mortgage credit comes when we can not renegotiate its current loans, asking for an extension of repayment period to his bank, and we need money, either to finance a specific project (the repair of roof of the house or the purchase of a new apartment in addition to the one of which one is already owner), either to lighten its monthly payments, paying less each month (in exchange for a longer repayment period).
The implementation of a mortgage purchase requires special attention, we will not necessarily find in the neighborhood agency. It is important to take a tour of banks and financial institutions before embarking on a mortgage purchase, to compare the different proposals that will be made. To simplify the task, you can consider going through a broker specializing in mortgage credit.
Conduct of mortgage repurchase
Your property that you put in mortgage will be appraised, in order to establish the value, and determine the money that you will be able to borrow, thanks to the calculation of the quota.
The percentage is the percentage of the value of the property that serves as collateral, and thus corresponds to the maximum amount that can be borrowed.
Example: you have a house that has been valued at 100000 euros. You can borrow 70% of the value of your home, 70000 euros. The percentage varies from 50 to 100%, depending on the credit institutions.
The purchase of mortgage credit is more easily granted if it is used to invest again in a real estate project: by borrowing the 70000 euros that my house worth 100000 euros allows me, I can buy another apartment (that I could rent for example, to repay the loan).
On the other hand, for the purchase of mortgage credit for non-real estate projects, the repayment term does not go beyond 20 years: buy a car, invest in shares of a company, make a trip or equip his house
If you want to sell your property, as a guarantee for the purchase of mortgage credit, it will reduce its credit with the money from the sale. The mortgage is lifted at that time, or, if desired, the mortgage can be transferred to another property.
Credit buy-back yes, but beware of the dangers
The repurchase of mortgage credit must be reserved for only two cases:
- unlock money to invest in a new real estate project
- to avoid over-indebtedness.
These two situations are diametrically opposed for the banker, the lender. In one case, the mortgage purchase will be used to invest , the redemption applicant has no particular economic difficulty.
On the other hand, in the second case, it is despair that acts. The purchase of mortgage credit comes here to reduce the monthly payments that can not afford to pay.
The main danger of the mortgage lies in the possible decline of real estate, if the money from his sale is not enough to repay the purchase of credit.
It is more complicated to make a credit redemption by being a tenant, but not impossible.
For rent, it is difficult to save, money paid for housing is not used to pay a mortgage. In my opinion, real estate credit is similar to savings: you never see the money spent on renting again, while the mortgage has an end date, and you can sell the apartment to get the money, even make a capital gain if the value of real estate has increased.
Before consolidating all its credits into one, we must see if it is possible to renegotiate its debts with each of the creditors. At least ask, they have no interest in letting their customer down and can be pretty open about it.