Interest rates are still historically low and continue to fall slightly from month to month. Current interest rates average 1.44%. In 30 months, rates have lost 0.05 points. Banks even offer rates below 1% over 20 years for concrete records . This is the best time for borrowers to consolidate their mortgage rates.
The criteria to consolidate his mortgage
For effective and useful renegotiation, certain criteria must be respected:
- the start date of the home loan: real estate loan buybacks must be made in their first third (eg first 5 years for a credit of 15 years);
- the proposed new interest rate must be lower than the purchased credit rate of 0.7 to 1%;
- the remaining capital must exceed 75,000 euros.
Under these conditions, homeowners who have taken out a mortgage since the fall of 2016, when the rates reached their lowest, may not be able to find their account, the low differential resulting in almost zero profits compared to the efforts made to gather the file and negotiate the rate.
Simulations carried out for a consolidation over 20 years
Borris simulated the case of a couple who took out a mortgage loan over 20 years in autumn 2015 for a period of 20 years and decides to make a repurchase of credit:
- rate of 2.5%,
- overall cost of credit: € 255,526,
- monthly repayment of € 1,065,
- outstanding capital: € 171,230.
After 42 months of repayment, this couple can get a 15-year credit consolidation at a much lower rate:
- new credit rate: 1.3%,
- overall cost of credit 188 557 €,
- monthly repayment of € 1,048.
After the repurchase of credit, the couple will gain 18 months over the duration of its credit, 17 € on its monthly payments and, over the total duration, will make a profit of 16,640 € after deduction of the expenses inherent to the repurchase . Indeed, the bank “loser” can claim compensation of 6 months of interest or 3% of the amount still to be refunded, or € 2 169 (the smaller of the two sums is taken into account). There are also application fees and warranty fees.
Simulation of a 25-year credit consolidation
Another example of repurchase of mortgage loan concerns a couple having borrowed over 25 years in spring 2016 a sum of 300 000 €:
- rate of 2.3%,
- overall cost of credit: € 394,751,
- monthly repayment of € 1,316,
- outstanding capital: € 281,047.
After 36 months of repayment, this couple can obtain a repurchase of credit over 21 years at a very interesting rate:
- new credit rate: 1.55%,
- overall cost of credit: € 329,364,
- monthly repayment of € 1,307.
After the repurchase of credit, the couple will gain 48 months over the duration of its credit, 9 € on its monthly payments and, over the total duration, will make a profit of 19 737 € after taking into account the various expenses .