When interest rates fall, borrowers can study the impact of a renegotiation, compared to the costs incurred. And, failing that, mention a redemption of credits, if the bank is not willing to renegotiate enough. When rates go up, it is possible to switch your credit into a fixed rate, if it was built on a variable basis. In any case, the assistance of a broker is recommended to negotiate the costs generated by these operations and help you to fully measure their feasibility.
Real estate loan: rates fall, what to do?
Should we renegotiate or buy back his credit?
Before starting a renegotiation of interest rates with your bank , you must know the costs associated with this operation:
– Early repayment indemnities (IRA) – can not exceed 6 months of interest on the outstanding capital and 3% of the outstanding capital.
– The application fees , up to 1% of the outstanding capital.
– The costs associated with the guarantee , up to 2% of the outstanding capital, under a mortgage guarantee, the most common.
Beyond these costs, it is also a question of taking the right measure of the operation at the level of the borrower insurance. Variable between 0.10 and 0.40%, its rate directly influences the total cost of credit. But all the assurances are not equal when one looks at them carefully. Finally, we must take into account the evolution of your personal situation and the possible resale of your property in the coming months.
If your bank does not give you complete satisfaction in this negotiation, you may consider consulting another institution. In concrete terms, this will result in a redemption of your current home loan .
Note that it is possible to obtain satisfactory renegotiation conditions in a different agency , while remaining within the same bank.
Real estate loan: rates go back, what to do?
Switch your variable rate loan to a fixed rate?
As part of a rise in interest rates, the only room for maneuver you have is to tip your mortgage in fixed rate, if it was built with a variable rate. This clause must be included in your loan agreement.
Note that there is also the fixed rate option , allowing borrowers to switch the rate on each anniversary date of the credit. An option to follow the market and protect yourself from too much lift.
Naturally, the transition from the variable rate to the fixed rate is not without costs . Not to mention that, justified by a rise in rates over the medium and long term, this transaction will systematically generate a fixed rate higher than that of your initial credit.
More radically, you can choose to compete and decide to obtain a new mortgage by paying off your current loan . There remains, again, to properly assess the costs associated with this approach, including the level of prepayment penalties.
A strong or lasting change in rates – downwards or upwards – implies asking the right questions, depending on the economic situation and your personal situation.