It is important to know that the repurchase of credit involves certain costs, and even in some cases prepayment indemnities. A credit buyback operation consists in setting up a grouping of all its credits in order to obtain only one loan and thus reduce its monthly payments. However, this practice generates costs such as filing fees, guarantees requested by the lender, insurance, etc. These can increase the total amount of your credit (s).
In the case of a credit union, it is generally required to take out Permanent and Definitive Invalid Death Insurance which will protect the lender in the event of an accident or illness causing permanent disability or death and further preventing repayment of the remaining capital. of. The latter may also ask you to take out a Temporary Disability Insurance contract. The insurance will therefore undertake the repayment of the total amount remaining to be repaid to the lending institution.
You will be able to subscribe to these insurance contracts when you have started your process of grouping loans, they will be determined according to your age and your state of health at the time of the application.
To know :
The institution grouping your loans is not able to take your disability insurance policy subscribed for your current credits. The proposed rates for the new insurance may therefore be higher than at present.
What guarantees for the lender?
In terms of collateral, the process of a credit redemption is very similar to that of a home loan. Indeed, the lender will most of the time ask for a ” deposit “. If you own your home, the lending institution will usually require a mortgage. Mortgage taking is usually done when the total cost of credit is high.
Early repayment indemnities:
Their calculation depends on the nature of the loans bought back:
- When the repurchased loan is a mortgage, the borrower must pay an indemnity which corresponds to the equivalent of 6 months of interest, calculated by applying the average loan rate on the repaid capital, not exceeding a ceiling of 3%. capital remaining due before repayment.
- In the case of a consumer loan, compensation will only be required if it was taken out after May 1, 2011. The calculation will vary depending on the principal to be repaid:
– If it is higher than 10 000 euros, the compensation is equal to 1% of this amount provided that the remaining duration of the initial loan is greater than one year, and 0.5% if the remaining duration is less than one year. year.
– For amounts less than 10,000 euros, no penalty is required.
The guarantees required in the case of a redemption of credits, are legally regarded as a mortgage.
Like any real estate loan, a guarantee will be requested by the purchasing organization. Notary fees and registrations could therefore intervene in case of application for a mortgage as a guarantee.