When you redeem your credit, you must carefully assess the costs of such an operation . The repurchase of your credit is only profitable for you if you save more than you spend on repayment costs.
You must therefore obtain a sufficient total cost gain to compensate for the following costs:
Early redemption indemnities (IRA) or penalties:
The new establishment from which you will carry out your loan repurchase will reimburse your outstanding capital with your current bank. The latter will therefore ask you for early redemption indemnities. Their amount must be specified in your loan contract.
They represent the equivalent of the 6 months of interest payable at the time of redemption, but may not exceed 3% of the capital remaining due . So if you redeem your credit in October, the IRAs will amount to the amount of interest you should have paid until April.
The cost of the warranty:
A repurchase of credit implies a new loan and therefore a new guarantee . Depending on your current warranty, the procedures are different:
- In the event of a mortgage, or IPPD, you must pay the release costs and provide for the establishment of a new guarantee.
- If your current guarantee is a deposit (such as Financing company, for example), you can recover part of your participation in the mutual guarantee fund that you paid when you took out the first loan. This amount allows you in large part to pay the new guarantee to put in place.
Application fee :
The bank that is going to carry out your loan buy-back will probably ask you for administration fees for setting up the new loan.
To keep a good margin of savings despite these costs, take the time to compare lending institutions to be sure to get the best rate for your new loan. You can use our services for this. As a broker, compares and negotiates for you the best rate for your credit repurchase.
Stay in your bank or redeem your loan elsewhere?
You can renegotiate your current loan with your bank or have it bought by another. If your bank has no interest in renegotiating your current credit at a lower rate . It can sometimes do this to keep you as a customer . However, this remains difficult to obtain and your bank may ask you in exchange for the subscription of other products (insurance, investment etc.).
In the case of a renegotiation with your current bank, you do not have to pay the various redemption fees (IRA, handling and guarantee fees) but it will certainly not be able to offer you the lowest rate of the market. It’s all about negotiation!
On the other hand, competing banks are ready to make you their best offers of mortgage loans at the lowest rate on the market to count you among their new customers. These are call offers: banks use mortgage loans to win new customers.