The cost of buying back credits is different depending on the file. The conditions negotiated upstream of the signature of the mortgage and during the purchase of credits can save money. The credit redemption guide accompanies you.
How much does a credit buyback cost?
The redemption of credits involves different costs. It is important to study them well before any signature, in order to calculate if the operation is really profitable.
Early repayment benefits
Early repayment of benefits are often negotiated when the mortgage is signed. Borrowers negotiate the possibility of being able to repay their credit early without charge. Nevertheless, this clause only includes the prepayment by own funds, if the credit is redeemed by another bank then there is a prepayment fee.
These fees are regulated by law. Their amount corresponds to 6 months of interest to be followed at the time of the request for redemption but can not exceed 3% of the outstanding capital.
For a redemption fee credit consumer can be requested only if the takeover involves sums above € 10,000 over a rolling 12 months and if the credits were made after 1 May 2011.
For an early repayment of revolving credit or overdraft no compensation can be charged.
The handling fees concern the work of your bank and/or your broker in the realization of your purchase of credit. The fees are always negotiable, they depend on the quality of the file and the motivation of the future lending institution to want to attract the new customer.
The fees can be of two types:
- Bank charges: between 1 and 7% of the amount redeemed
- Brokerage fees: between 1 and 5% of the amount of the new loan
In all cases the application fees are only due if the file is finalized. A simple request for information, even followed by an appointment can not give rise to a fee.
Mortgage or surety fees
In terms of guarantees, a loan buyback works in the same way as a conventional loan. In the case of a redemption of credits, there are two types of guarantees: the mortgage or the bond.
If the borrower owns a property at the time of the redemption of credits, whether this property is that of the principal residence or it is rented out, the lending institution may request the taking of mortgage on this property, if the amount of credit is important. The repurchase of credits is then called repurchase of mortgages. This is a procedure requiring the presence of a notary and therefore generates some fees, which are integrated into the overall amount of the transaction. Mortgage fees are generally around 2% of the loan amount. In addition to this is added a tax of land registration, of the order of 0.715% of the loan amount.
In the case of the guarantor, no additional charge is added to the total amount for the redemption of credits if this is provided by a third party. On the other hand, if the bond is that of a surety agency, it will be subject to a commission as well as a contribution to a mutual guarantee fund. This contribution will be returned at the end of the loan while the commission is to be paid to the surety, for an amount ranging from 2 to 3% of the amount of the credit.
The cost of borrower insurance
The cost of insurance depends on the nature of the credits to be repurchased. In the case of real estate loans, obtaining the purchase of credits is conditional on the purchase of a disability death insurance. The cost of insurance depends on the age and state of health of the borrower.