Real Estate: Is it time to renegotiate his loan?

With lower interest rates, many borrowers are considering whether to renegotiate the financial terms of their mortgage. When the game worth the candle, do not be afraid to indulge in a veritable assault course. Here are questions to ask.
1.When renegotiate its loan?

To consider renegotiating his loan from his bank or to redeem by another banker, at least two out of three conditions must be met. Starting with a differential interest rate of at least one point. Other criteria to consider: the status of the credit. "More recent is the loan, plus the redemption may be attractive for the borrower" remark Ari Bitton, associate director at brokerage ab. If he consults its amortization schedule, the borrower will find that the amount of interest that rule to the banker, decreases over the years. Earlier this term, he pays so much interest in the bank. The third condition relates to the amount of capital outstanding for funding. An amount of at least 50,000 euros for an operation of renegotiation.
2. How?

When two of the three conditions above are met, it remains the borrower consult your banker and competition. As the banker does not see this operation a good eye, do not expect miracles. At most a gain of 0.2 or 0.5 points on the rate. Unless the borrower is a major customer have invested in this bank. By threatening to transfer them to another bank, it has some weight in the negotiation.

Apart from this particular case, it should make the rounds of banks either directly or by contacting the credit brokers. Hit hard by the decline in the number of transactions, these professionals advocate the purchase of credit, which raises the activity.

Redeem his credit mean a loan cheaper from another bank to repay the old one. The practice is growing. "For two months, nearly two out of ten cases relate to the purchase of credit continues Ari Bitton. The trend should continue during the first half of 2010, a period during which interest rates should remain at a low level.
3. What costs taken into account?

A borrower who buys the loan is subject to three major types of expenses: those of the file, prepayment penalties and guarantees.

The fee. Also according to his profile heritage, it is possible to negotiate directly with a bank. But this post is usually several hundred dollars. A broker as abcourtage holds between 600 and 700 euro fee per case subject to a takeover.

The prepayment penalties. While the law capped at 3% of capital outstanding, their weight is far from negligible. The only loophole to avoid: having traded penalties during the initial underwriting of the loan.

Guarantees. Again, it takes a few thousand euros. To ensure the risk of unpaid bills, bankers take a real guarantee - mortgage or lien of the money lender, on the property they finance. Unless they are content to bail granted by a specialized type of accommodation or credit Saccef.

Whatever the type of collateral, a borrower's bank to change its mortgage, should "lift" the loan guarantee of origin and take another for the new funding.
Our simulations

Consider the case of an individual who has made a property purchase of 200,000 euros in 2007. With 10% capital, he contracted a loan of 180,000 euros, in these simulations established by ab brokerage. We made the assumption that the client was able to negotiate the fee. If this is not the case, it should detract from the gain in the two solutions of an amount of 600 euros.