Is it possible to change banks, even when you have an outstanding loan or do you have to repay it before leaving? Here is our answer to Martine’s question.
Question from Martine, January 25, 2023
Hello, having contracted a loan in my old bank in 2019, it refuses the transfer of the withdrawals to the new bank. She wants me to redeem this loan with the new bank or close it. Is this normal? Can I, in this case, only keep a bank account for this direct debit by supplying it each month?
Hello Martin,
A bank cannot prevent you from moving to a new establishment. Nor can it force you to repay your loan before leaving or have it redeemed by your new bank.
On the other hand, she can ask what the monthly credit payments are taken from an account that you have opened with her. Thus, in the context of a consumer credit, certain banks include in their contract that the Borrower authorizes the Lender to carry out the automatic debit of the chances and of any other sum due under this contract from his domiciliary account or from any other account opened in the books of the Lender.
The monthly loan payment must therefore be taken from an account of the lending bank, but income does not have to be domiciled with the same bank. If you ever want to leave your bank at all costs, you will therefore probably have to have your credit redeemed by the establishment you are joining or make an early repayment before leaving. However, you can perfectly keep only one bank account from which your monthly loan payment is debited, then close this account once the loan has been repaid.
Changing banks can be complicated when you have credit there, especially real estate. For a long time now, the lending institution has made bank domiciliation a condition sine qua non the granting of credit. This practice was governed by Ordinance No. 2017-1090 of July 1, 2017, which only authorized the domiciliation of income in return for an individual benefit, and limited it to a maximum of 10 years. The Pacte Law of May 22, 2019 repealed this. From now on, the domiciliation of accounts depends on free commercial negotiation.
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Check the terms of your credit carefully
In fact, nothing obliges a borrower to agree to domiciliate his accounts. But there is also no obligation for the bank to accept your credit report. Most often, this request remains informal and the account manager only plays on the sensitive chord of mutual trust. But sometimes, a clause can be added to the bank offer, in return for a discount on the rate, advantages on banking services, or an effort on bank charges, for example. In this case, it is listed in your loan offer.
Thus, if you want to change banks while you have an outstanding mortgage, you must first of all check whether a clause obliges you to remain domiciled within the lending institution. If the answer is no, you are free. Otherwise, you will still probably have to keep an account open with your first bank, but nothing prevents you from opening another account with a competing bank. with which you will carry out your daily operations.
To save money, all you have to do is remove the means of payment, insurance or group service offers from the first bank, which will then only charge account maintenance fees, explains Basile Duval, spokesperson for Panorabanques, in an article from Parisian. It’s around 2 to 3 euros per month or even free in some cases.
The ranking of the least expensive banks on February 1