You loved the credit renegotiation period back in October 2016! You'll love the one in June 2019, when you can take advantage of equally aggressive rates! Now's the time to pay your banker a visit.
With interest rates down again, bank branches could be "sold out" until summer. Many borrowers should be rushing to renegotiate their mortgages. Especially as they are no longer obliged to domicile their income with the bank that has already granted them a loan! Here are a few tips to help you negotiate the best terms.
Tip 1
Check a few key figures
With an average interest rate of 1.35% across all terms in April 2019 (source Crédit Logement CSA), borrowers are returning to the exceptional conditions of November 2016, when loans were negotiated at 1.33%. A context that raises questions about the conditions agreed for the current property loan(s). But before rushing to your banker for a chat, it's a good idea to check that the following parameters have been met:
- have not exceeded the first third of the term of your loan ;
- have an outstanding capital of at least 100,000 euros;
- and an interest rate differential of between 0.7% and 1%.
Don't forget that renegotiating a loan comes with a hefty fee of around a thousand euros, given the large number of requests that banks have to deal with.
Tip 2
Look into borrower's insurance
The cost of a loan is based not only on the interest rate, but also on the amount of the loan insurance. This is calculated according to a number of parameters, such as age, the borrower's state of health, the duration of the loan, etc. To limit this budget, the law now allows you to opt for a delegation of insurance. This means that an establishment other than the bank can insure the borrower and offer more advantageous terms. You'll need to make sure that the guarantees provided by the new contract are at least equivalent to those initially taken out. And since January 1, 2019, all borrowers can cancel their insurance on the anniversary date of the contract. The bank must process the request within 10 days.
HISTORIC INTEREST RATES!
With a further acceleration in the fall in mortgage rates, current values are limited to 0.80% over 15 years for borrowers with the best profiles. These conditions are just as advantageous as they were in October 2016!
Tip 3
Consider a credit buyback
To avoid the high costs of renegotiation, borrowers can consider a credit repurchase through a broker or another bank. While the interest rate gains are much higher, the cost of early repayment should not be overlooked. This is equivalent to paying 3% of the outstanding capital, up to a maximum of 6 months' interest. Once these precautions have been taken, the operation can prove highly profitable.
Let's take an example: for a €200,000 loan taken out in January 2016 and renegotiated in May 2019, the fees would amount to €5,904. But the gains achieved thanks to a rate of 1% over 17 years instead of 2.4% over 20 years will save €15,900 (source: Les Echos).
4th tip
Change your bank
With the end of direct debit, there's no shortage of opportunities to play the competition! Under the March 27 Pacte law, banks can no longer require you to pay your salary or other income in return for a mortgage.
Soon to be applicable - the implementing decree is awaited - this measure will erase the ordinance in force since January 1, 2018, which obliged borrowers to domicile their current accounts for a period of 10 years. The deputies believe that the possibility of transferring one's income should be part of the commercial negotiation and facilitate banking mobility. Let's hope the banks will play along, as they are in a strong position vis-à-vis borrowers.
Christophe Raffaillac