While mortgage rates are rising in all banks, is it too late to renegotiate your loan? If latecomers can no longer hope for the best rates, there may still be reasons why they seek an offer from another bank.
Since the beginning of March, borrowing rates for a mortgage are rising. In its letter of March 18, Empruntis, Expert credit and insurance, explains that the rise in credit rates is clearly continuing: All our partners are increasing their scales. The rate differences range from 6 cents, at the lowest, and up to 35 cents. No more banks lower their rates. For a mortgage over 20 years, borrowers can obtain an average rate of between 1.25% and 1.45% depending on the region.
Already too late?
Faced with this rise, should we hurry to renegotiate our credit? For Sandrine Allonier, communication director of the broker VousFinancer, it is already almost too late. Normally, those who had to renegotiate their contract have already done so at the end of 2019 or the end of 2021 when the rates had fallen to an average of 1.10%. Today, we have rates that are rising significantly, with banks that have raised their rates by half a point in one month. We even have a bank now that has exceeded 2% over 20 years for the poorest profiles.
The renegotiation of credit can be financially interesting subject to respecting some conditions: the borrower must be in the first part of the repayment of his credit, and the rate in force must be less than one point to the contracted rate. 0.7 may be enough, judge Sandrine Allonier, if it is a recent credit and with loan amounts that are significant at the base and over long periods. Indeed, the longer a loan, the more the monthly payments are based on interest. However, it is on this that the levers of the renegotiation will be the most important, explains Sandrine Allonier.
Real estate credit: borrowing becomes more difficult, the proof in 3 figures
Who, concretely, can now have an interest in renegotiating their credit? The people who are concerned are people who have taken credits early 2016 since at the time we had rates between 2.20 and 2.45% over 20 years, then they only went down, recalls Sandrine Allonier. As a result, it’s still not too late for people who haven’t done it, but they can still blame themselves a bit for not having done it before.
Several interests in the renegotiation
If we talk about renegotiation, in fact it is most of the time a credit redemption from a competing bank. The renegotiation within his bank no longer works, confirms Sandrine Allonier. To renegotiate, you almost have to change banks today. Whatever happens, you will have to pay early repayment penalties, limited to 6 months of interest, which will be covered by the savings and reintegrated into the new loan.
The cost of renegotiating a home loan
The renegotiation of credit has two uses: reduce the duration of the loan or lower its monthly payments. Everything therefore depends on the needs of the borrowers. VousFinancer thus distinguishes two types of profiles: We have rather high-end profiles that range keep the same monthly payment and reduce the duration. These are people who have means and who therefore are not close to a hundred euros. This will allow them to earn on average one to two years.
Find the lowest rate for your real estate project!
Conversely, there are more fragile profiles, especially at the moment, for which there is a real objective of gaining purchasing power, where it is necessary to free up financial possibilities to face other constraints. In these cases we lower the monthly payment to meet these other expenses. The renegotiation of credit can then be a solution.
Real estate credit: 40% of French people use a broker
Still others seek to extend their credit: There are banks that agree to buy back an external loan and extend its duration up to five years, explains the communication director of VousFinancer. This will then allow, even if the rate is almost the same as the first, to significantly lower the monthly payments and therefore to redo a purchase behind. The goal is not to save money but to pay less monthly to free up new borrowing capacity for a future project.
Example of interesting credit redemption
In which case the repurchase of credit can be financially profitable? Here is an illustration provided by VousFinancer.
January 2016. Simon and Margot, 35, sign a loan of 300,000 euros at 2.70% over 25 years. Their monthly payments, excluding insurance, are 1,376.27 euros.
March 2022. They have 226 monthly payments left to settle, i.e. just under 19 years, with an estimated remaining capital of 243,605 euros for a total amount to buy back (including penalties, guarantee and fees) of 252,253 euros for the new bank.
With a renegotiation rate of 1.20% the estimated gain if the couple decides to keep the same duration but to reduce their monthly payment (1247.59 euros) will be 29080 euros. In the event of an identical monthly payment, they will be able to shorten the duration to 203 months for a gain of 32,246 euros.
It’s not just the rate
Beyond the credit rate, a novelty is emerging to save money: the Lemoine law. Publish at Official newspaper at the end of February, it will allow from June 1 for new home loans, and from September 1 for those who are already repaying their credit, to terminate the borrower insurance contract at any time, and no longer just on the anniversary date. At the end of the day, thousands of euros in potential savings. In the context of a loan buy-back by another bank, if the insurance on the proposed loan seems too expensive to you, you can take out another one from the competition at any time.
Mortgage loan insurance: these 3 upheavals that await you
The Lemoine law also puts an end to the medical questionnaire as of June 1 (in the event of a loan of less than 200,000 euros per person and for an end of credit before the age of 60). For some borrowers, there will no longer necessarily be a need to complete a medical questionnaire and therefore there will be no additional premiums in the event of illness, overweight or diabetes. It’s very positive because there are people who will make significant savings on borrower insurance. Maybe we’re going to make little savings on the rate but make some on the insurance, underlines Sandrine Allonier.
find the best real estate rate