Mortgage rates are down, the CSA Housing Credit Observatory reveals “they are returning to their level of August 2013”. Small Credit observes that today, clients can get a mortgage at a fixed interest rate of 2.80% over 20 years (excluding insurance). With such low rates, recent homeowners have an interest in renegotiating their credit with the competition to take advantage of more favorable terms.

Historically low rate

Historically low rate

The ECB’s “accommodative” policy, which distributes a large amount of cash at a virtually zero rate, encourages banks to lend more and keeps interest rates on mortgage loans at very attractive levels. The financial markets also offer very advantageous financing conditions. The benchmark index of real estate loan rates “10-year OAT” fell to a rate of 1.91% on 12/05/2014 against an average rate of 2.10% in April. Anything goes against the fact that mortgage rates remain particularly low, continuing the downward trend that has started since the beginning of the year.

Renegotiation is now!

Renegotiation is now!

The year 2014 remains favorable to renegotiation of credit especially for those who could not take advantage of low rates in 2013 because the amortization of the loan was not enough. According to the Ifop study, “nearly one in two borrowers who have a current home loan could lower the cost of their credit by taking advantage of a renegotiation of rates.” It is necessary to accentuate the negotiation on the insurance borrower, item which represents approximately 10% of the total cost of a credit. The bank no longer has the right to impose on its client the group insurance contract that it markets provided that the contract offered under delegation has the same guarantees as the group contract (Lagarde / Hamon law). Small Credit offers loan insurance that allows you to save up to 60% * savings, with equivalent guarantees through rates tailored to the profile of customers.

Make a loan redemption simulation

Example of a couple who borrowed 250,000 euros in 2011 at a rate of 3.80% over 20 years and who wishes to redeem today. 2 possibilities :

1. We keep the remaining duration which implies a decrease in the monthly payment.

2. We keep the original monthly payment with reduction of the loan term.

  2011 Takeover in 2014 Solution 1 Takeover in 2014 Solution 2
Value of the loan 250,000 euros 223,927 euros
Remaining capital + 3% penalties
Remaining capital + 3% penalties
Rate 3.80% 2.80% 2.50%
term of the loan 20 years 17 years 15 years
Monthly $ 1488.73 1380 € $ 1493.12
Interest cost $ 107,295 $ 57,762 $ 44,835
Economy   $ 22,476 $ 35,403

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