Home loan buy-back: it’s the right time!
With an average of 1.44% according to the Housing Credit Observatory / CSA, mortgage rates are currently at their lowest. Record rates that encourage both individuals to access real estate and owners to review their financing: the year 2019 indeed seems propitious to make savings on his loan via a repurchase of mortgage.
Rates still at their lowest
The first quarter of 2019 extended the golden period of low mortgage rates : 1.22% over 15 years, 1.39% over 20 years and 1.63% over 25 years! The National Agency for Information on Housing (Anil), during its quarterly compilation of mortgage loan scales, explained that these favorable borrowing conditions were due both to the decline in the rate of French government bonds (OAT), as well as the stability of current European monetary policy. Translation: the lights are green to take out a mortgage on the best conditions or to revise its rate down!
The right timing to redeem your mortgage
Director of studies of Good Bank, Merla Lambert recently confirmed in the columns of Capital that the repurchase of mortgage is a “wise” decision for the borrower. The operation must nevertheless meet three distinct criteria:
In order to be optimal, the renegotiation of real estate credit must be done during the first third of the term of the loan, that is to say when the repayment of interest is done most to the detriment of the owner’s capital;
The difference in borrowing rate between the current and future bank should be between 0.7 and 1%, in order to maximize the savings achievable;
The amount borrowed must be at least equal to 75,000 so as not to have his file refused by the bank.
The repurchases of mortgage loans made in 2016 or before remain the most profitable, the rate differential being lower between the second half of 2016 and today. Did you buy your property between 2012 and 2015? You are right in the target! For example, a home loan of 200,000 over 20 years taken out in 2015 at the rate of 2.55% can be redeemed in April 2019 with a rate reduced to 1.3%. Consequence: the borrower gains a year on the duration of repayment with monthly payments in slight decrease (-17 ) and especially nearly 40 000 on the cost of the credit!