Retiree Loans, Everything You Need To Know

The loans for retirees are one of the financial products that generate more doubts among users. Many people wonder if, after reaching a certain age, and without working, it is possible to request financing from a bank or other entity. 

The answer is yes, although with some nuances, depending on the entity from which financing is requested or the profile of the applicant. That is why today we want to talk to you about retiree loans and all their characteristics.   

What to consider when applying for retiree loans?

What to consider when applying for retiree loans?

The first thing to keep in mind when looking for retiree loans is that the grant conditions are similar to those of any other loan. Although, many times, taking into account the age of the applicant, some banks may ask for some additional requirement, such as submitting a guarantee. 

In this article we tell you in detail how to request a loan and what requirements must be met. Although, for the moment, we are going to focus on two of the conditions to which entities will give greater importance when granting loans to retirees. 

Applicant’s creditworthiness

It is a determining factor for any type of loan. If the entity believes that the loan cannot be repaid or that we are a risk profile, it will not approve the request. In the case of personal loans for retirees, solvency will be valued through the income statement and the receipts of the retirement pension. 

The age when the loan is finished repaying

It is important to know that when talking about the age of the applicant, what is taken into account is the age that he will be when he returns the last term of the loan. This is one of the most important factors when applying for personal retirement loans. 

What is the maximum age to apply for retiree loans?

What is the maximum age to apply for retiree loans?

As we mentioned, age is one of the most widely analyzed risk factors. Also, considering the nature of retiree loans, it’s worth stopping to explain in detail. 

Normally the maximum age to access credit for retirees is 75 years. Although it is true that some entities can afford to be more flexible with this requirement and extend the deadlines. 

Requirements and documentation to apply for loans for retirees

Requirements and documentation to apply for loans for retirees

As we have already discussed, the requirements and documentation to present when applying for retirement loans are the same as with any other loan. Anyway, let’s make a small reminder of what financial institutions usually ask for.  

  • Presenting a valid DNI or NIE is an essential condition. 
  • Present a demonstrable source of income. In the case of retirees it would be the pension. Be sure to check out our article on pensioner loans.
  • Some banks also request supporting documents to know the reason for requesting the loan : reforms, travel, investments, etc.  
  • Have a clean credit history. Not appearing in delinquent files is an essential requirement for all banks. 
  • Life insurance. In the case of personal loans for retirees, some entities also request this documentation as a guarantee of repayment of the loan if necessary. 

With us, many of these requirements are no longer important. As a private equity financier, we can afford to be much more flexible with our loan requirements.  

 

Private equity loans, what are they and how to get them

Has the bank denied you a loan and you need money urgently? In that case you should know that there are other solutions to obtain financing when traditional banking closes the door. A good alternative is private equity loans, that is, all those that are not granted by traditional financial institutions.

In this article we will explain what private equity loans are, when they may be needed and the advantages that this type of financing has.

What are private equity loans?

What are private equity loans?

Private equity loans are all those that are not granted by banks. One of the advantages of these loans is that they can be requested by individuals as well as by companies and professionals who, for example, want to start their business. Even so, this type of loan can be used for a multitude of purposes that we will detail later.

The main difference between traditional loans and private equity loans lies in who makes them. On the one hand, the former are granted by traditional financial entities: lifelong banks. In the case of private equity loans and hence their name, they are granted by private financial institutions.

After the economic crisis caused a cut in the financing of banks to individuals and companies, private capital loans positioned themselves as the great and only real alternative to traditional banking. And it is a type of operation that has many advantages for all those who need to undertake or solve liquidity problems.

Advantages of these loans

Advantages of these loans

In general, traditional banking asks for many requirements to grant financing to the client. If this is in delinquency files, if you have large debts or cannot demonstrate a fixed income, it is very difficult to apply for a loan through the traditional route. The main advantage of private equity loans is that they often become the only alternative to traditional financing for this profile of users. In fact, they can sometimes serve as a bridge to get a loan through the bank. In other words, they help us get money to solve situations such as, for example, paying our debts and getting out of delinquent files. By the time we are no longer on these lists, we may again be acceptable candidates for traditional financial institutions to grant us a loan.

Another advantage of this type of financing is that, as a general rule, the process of applying for private equity loans is a faster and more agile operation. In addition, the processing of such loans is also usually easier, that is, very few people are left without opting for this type of capital, and this is so because we believe in second chances.

When are private equity loans a good solution?

When are private equity loans a good solution?

There are many situations where borrowing with private equity becomes a good option. Applying for private equity loans is a solution to face liquidity problems, such as unforeseen or other expenses. We will detail the most common situations to request this type of financing.

The repurchase of credit for retirees

The repurchase of credit is a current operation which consists in having repurchased a mortgage or consumer loans in progress by a third body. The repurchase of credits for seniors is a similar operation, but adapted to the seniors. By playing on competition, senior access to a more advantageous borrowing rate.

He then recovers financial room for maneuver despite the drop in income linked to his retirement.

How does a credit buy-back for a senior person work? What are the benefits and limitations due to age? Is there a difference between a repurchase of credit for a senior owner and a repurchase of credit for a senior tenant? Can we finance a new personal project such as a trip abroad or home improvement work through an offer to buy back retired credit? Before embarking on this operation, it is essential to take into account its ins and outs.

Why buy back credit at retirement?

Why buy back credit at retirement?

The procedure for buying back credits consists of consolidating all its loans to merge them. Result: there is only one loan left. The goal is to lower the pressure on monthly repayment deadlines and benefit from a better interest rate.

In return, the duration of the single loan is sometimes extended. Thus, the purpose of buying back retirement credits is not so much to save money as to reduce your monthly payments, possibly restoring your debt ratio to a reasonable and sustainable level (35% to 40%) and increase its purchasing power.

The transition to retirement is a key moment in everyone’s life. It corresponds precisely to a loss of income of around 30%. This shift can be dangerous for retirees in a fragile financial situation or flirting with over-indebtedness.

The advantage of a retiree is that it offers guarantees to lending organizations:

  • The amount of his retirement pension is known and stable.
  • He was able to accumulate and build up a heritage.
  • He no longer has dependent children.

The profile of a senior is therefore interesting for banks which are more easily inclined to formulate an offer to buy back credit.

A repurchase of senior credit to finance a personal project?

A repurchase of senior credit to finance a personal project?

No more active life, make way for the realization of personal projects constantly pushed back for lack of time! But the transition to retirement synonymous with lower cash inflows seems to constrain the range of possibilities.

To plan a trip abroad, initiate development work in their accommodation or participate in the payment of higher education for children, the retiree can always opt for a consumer credit. The catch is that the borrowing rates for personal loans offered are often expensive.

The solution goes through a credit buyout. Why ? Because it is possible to include cash intended to finance the personal projects of a retired person, all at a more attractive interest rate. You just need to specify it at the time of the transaction to the lender.

This reserve of money is then integrated into the single monthly repayment. The senior no longer has to take out a new consumer loan, and kills two birds with one stone! The additional cash included is then amortized over an extended period and allows expenditure to be spread over time.

Up to what age can you buy back credit?

Up to what age can you buy back credit?

Age is taken into account in the bank profile study of the borrower. However, this criterion also does not constitute a tight barrier to access to credit. There is no age limit.

A senior borrower can start repaying their maturities up to the age of 75 without problem, certain offers extending this possibility up to 85 years . It all depends on the debt capacity and the repayment capacity of the borrower.

Faced with the lengthening of the lifespan and the endlessly postponed date of retirement age, lending institutions are organizing to offer dedicated products adapted to the specificities of seniors (and even pre-retirees ). Senior credits can even be repaid with loan ends fixed at 95 years .

So, theoretically, a loan buy-back can be a recourse to 69 years for a loan term of 25 years! However, there is a distinction between a senior tenant and a senior owner. The latter offers higher guarantees by owning real estate. He can hope to take out a mortgage loan up to 96 years, against only 85 years for a tenant borrower.

In fact, the vast majority of insurance contracts offered by banking organizations offer coverage up to the insured’s age 70 or 80.

Beyond that, it is advisable to apply to specialized insurers or to resort to other types of guarantees. In particular, it is possible to opt for the pledge of a savings contract (life insurance, term account, savings plan in action, etc.).

A second possibility is to take out a credit repurchase for senior over a short period without taking out borrower insurance. Please note, however, in the event of death, the heirs will be liable for uninsured debts.

What are the costs to anticipate for a repurchase of credit for retirees?

For loan consolidation to be advantageous, focus should not be solely on the borrowing rate but on the overall cost of the transaction. In fact, buying back your loans entails costs:

  • the application fees to be paid to the new lender;
  • the early repayment indemnities (IRA) payable to the lending organization from which the initial credit was taken out;
  • credit insurance charges ;
  • guarantee costs (release of mortgage, pledge, etc.).

For a person over the age of 65, death and disability insurance is a criterion which significantly increases the overall cost of buying back credit. Generally, group contracts of insurance companies cover reimbursements up to 75 or 80 years. But the rates increase with the age and the state of health of the borrower.

The logic is as follows: the more the subscriber ages, the more his medical history accumulates or the risk of developing diseases increases. Once the health forms have been completed and the medical examinations carried out, the senior is therefore faced with sometimes very significant premiums. The solution is to activate the insurance delegation to bring competition into play.

Individualized borrower insurance is thus better suited to the profile of the retiree, especially since senior contracts are now marketed. They cover loans up to 85 years. To obtain the best credit buy-back offer, a simulation allows you to visualize the state of the market and compare the different commercial proposals.

The repurchase of credit for retired tenant

The repurchase of credit for retired tenant

Despite misconceptions, a retired tenant has the flexibility to request a loan consolidation. He can get a single loan by extending the repayment term up to 12 years. This is particularly interesting for senior tenants who are looking to buy consumer credit.

The transition to retirement for a tenant constitutes a loss of income felt more strongly. The weight of revolving loans with high interest rates constrains financial room for maneuver. The repurchase of consumer loans is then used to loosen the grip on the loan charges paid each month.

The request to buy back credits for a senior tenant follows the same procedure: study of the feasibility of the request, submission of the file, response from the lending organization. The bank may ask for guarantees to guard against the risk of non-payment. It can for example demand an assignment on the retirement pension, that is to say that it directly deducts the amount due from the pensioner’s income.

The repurchase of credit for retired owner

The repurchase of credit for retired owner

The grouping of loans for a senior owner makes it possible to merge consumer credits with a mortgage loan being repaid. The repurchase of mortgage is defined as such when the outstanding amount of the mortgage corresponds to at least 60% of the total outstanding amount of the repurchase of credit. Otherwise, we talk about buying consumer credit for senior.

The senior owner has, by definition, a property portfolio. It therefore presents an interesting and less risky profile for banks. It is all the easier to obtain a loan buy-back in this context. In addition, if the retiree has completely finished paying off his home loan, he can then demonstrate excellent borrowing capacity.

The repurchase of mortgage for retirees

The repurchase of mortgage for retirees

The repurchase of mortgage is distinguished by the fact that it requires a taking of collateral. The operation then corresponds to a repurchase of credits with a mortgage guarantee. The lender covers itself in the event of repayment problems linked, for example, to the death of the borrower.

The management of this request can be entrusted to a non-exclusive agent for the repurchase of credits. The intermediary studies the situation of the senior owner wishing to use a loan buy-back. It reviews income, the rest to live or the debt ratio.

When the feasibility of the project is validated, the retiree loan repurchase request file is sent to the various targeted lending organizations. They make an offer or not. A reflection period of 10 days has been introduced since the Scrivener law, if the request concerns mortgage loans.

Once the signature is affixed, a withdrawal period of 14 days for a consumer credit buyout must be respected. The release of funds is then initiated, once the withdrawal period has ended.

The deadline for releasing funds from a loan buy-back

How long to get a credit buyout response? There is no specific answer to this question. It all depends on the nature and the complexity of the case. The only certainty: the procedure for buying consumer credit will be shorter than that for grouping home loans.

Besides, taking the time to properly build up a file for a credit buy-back is a first step so that your file can be processed more quickly. From the response time to the withdrawal period, including the reflection period: what are the elements to know and the pitfalls to avoid? We tell you everything.

Release of funds from a loan buy-back: what does it consist of?Release of funds from a loan buy-back: what does it consist of?

The release of funds is the last step in a loan buyback operation. After contracting the new loan, the lender releases the agreed amount. This sum is dedicated to the reimbursement of debts included in the repurchase of credits.

The remaining capital due and any early repayment indemnities are financed by releasing and reimbursed from the original financial institutions.

More specifically, in the context of a buyout of a home loan with a mortgage guarantee, the sums are released through the notary. In the other cases (repurchase of real estate loan agreed with a surety or repurchase of consumer loan), the unblocking is directly carried out by the new bank. This will then send the reimbursement by bank check or by transfer to the financial organizations concerned.

What is the average time taken to release funds from a loan repurchase?What is the average time taken to release funds from a loan repurchase?

The time required to release funds from a redemption or a grouping of credits may vary depending on the financial institution and the contact person. However, it is possible to see an average of the time required to release funds for a loan buy-back:

  • for a repurchase of mortgage with mortgage guarantee, the delay of release generally varies between 2 and 3 days;
  • for a repurchase of real estate loan without mortgage guarantee or within the framework of a repurchase of consumer loans, the release of the funds takes place immediately upon reception of the compliant loan offer and signed by the borrower.

The deadline for releasing funds for a buyout of a mortgage with mortgage guarantee is therefore extended, in connection with the essential intervention of the notary in the circuit.

What is the response time of the lender?

What is the response time of the lender?

Before starting a procedure concluding with a loan repurchase, it is essential to check if your request is not in contradiction with the criteria which define the refusal of the loan grouping. What are they ?

First, you must have a stable borrower profile and be resident on French territory. If one of these two points is not attested, be sure to put all the advantages on your side by correcting your weaknesses and your failings to present the best profile it is. The debt ratio and the remainder of living are carefully studied by the banks, it is thus advisable to be informed on their method of calculation in order to present its file in its best light.

Then, you can send your loan repurchase project to your bank, which is then called “renegotiation”, or probe competing lending institutions for comparison. Then there is a waiting period, the time that the internal engagement committee of each establishment contacted consults and delivers its response. When the agreement is obtained, a deadline for processing the file must be respected.

It is therefore necessary to count about ten days when the file includes all the required supporting documents. This period of time is longer when buying back credit including real estate. Indeed, the lending establishment must carry out an appraisal of the house or apartment, then attest to its value and the checks as well as the formalities to be completed are longer. Ditto with a notary in the context of a cash purchase.

What is the waiting period for the loan buyout offer from the lending organization?What is the waiting period for the loan buyout offer from the lending organization?

When the credit consolidation request file is accepted by the bank, you will then receive a loan repurchase offer. It’s your turn to play the watch by taking the time to think carefully about the various proposals, to analyze them or even compare them with other offers delivered by other lending institutions.

Note that your commitment does not occur until you have signed the contract explaining the nature of the credit and the various clauses. As part of a mortgage buyout of up to 60% minimum, the subscriber benefits from a 10-day cooling-off period as stipulated in the Scrivener law, during which he can mature his choice to ultimately accept or refuse the commercial proposal made.

The signing of the loan offer formalizes the agreement. However, some organizations play the watch by relying on the legal withdrawal period. On average, the release of cash funds and the redemption of old loans take place over a month.

What is the withdrawal period for a credit buy-back?What is the withdrawal period for a credit buy-back?

The withdrawal period is 14 days for a consumer credit buy-back offer, this terminal being established by the Cogilaw company since May 2011.

To withdraw, you must send by post a registered letter with acknowledgment of receipt. Slide inside a letter of withdrawal to the establishment that made the offer. Generally, you just need to fill in the withdrawal form which is attached to the credit buyback contract.

Note that you have no reason to justify your decision or to pay any administrative costs and other compensation.

The only exception occurs when funds have been made available before the end of the withdrawal period. In this case, the borrower who retracts has 30 days to repay the sums collected to which is added the total amount of interest calculated over the period.

Good to know : activating your right of withdrawal with a view to consolidating a loan implies the termination of back-to-back services like various insurance policies.

What is the deadline for obtaining a mortgage loan repurchase?What is the deadline for obtaining a mortgage loan repurchase?

Obtaining time is necessarily longer because this category of credit buyback operation requires a mortgage guarantee. However, this document is an act necessarily drawn up by a notary.

This is an additional step in your journey as a borrower, because the drafting of the notarial deed comes before the signing of the buyout offer. The reorganization of your debt may therefore require an estimate of the value of the property, lengthening the deadlines accordingly. Before being issued a finalized loan offer, it is therefore necessary to allow a month.

How to reduce the time to make a credit buy-back?How to reduce the time to make a credit buy-back?

If it is not possible to take shortcuts in the procedure or to be generous with the deadlines set by law, certain common sense reflexes allow, failing not to gain, not to waste time. You must prepare your file beforehand by clearly defining your objectives:

  • reduce my monthly payments;
  • take advantage of a lower borrowing rate;
  • finance a new personal project, etc.

Begin to analyze your personal, family and property situation yourself, taking into account future developments:

  • transition to retirement;
  • change of job;
  • inheritance that feeds your heritage;
  • more dependent children, etc.

Consider making estimates on the gains brought by a credit repurchase by operating simulations online or through an intermediary.

Finally, bring all the supporting documents in order to constitute a complete file, which will allow the lending organization to study it carefully as soon as it is filed. And if you lack the time to do the procedure yourself, the option of the intermediary, the loan repurchase broker, seems ideal.

Pensioners loans – how to obtain?

 

One of the financial products that generates the most doubts and questions are loans for pensioners. This group of people has particular characteristics that, in themselves, make it not well considered by traditional banks.

Can I get financing if I am retired or if I do not have an employment contract? These are some of the questions that lie in wait for this type of user. That is why in this week’s article we want to talk about loans for pensioners and their special characteristics.

What are pensioner loans?

What are pensioner loans?

Let’s start at the beginning: pensioner loans are intended for those who collect a pension. This means that they are not only for retirees, but for all those who collect a pension, even if it is for disability or disability.

In our country there are several types of pensions: for retirement, permanent disability or death. The latter includes the widowhood or orphanage pensions that the family of the deceased would receive. It should also be taken into account that there are contributory and non-contributory pensions. The latter are granted to people who do not have sufficient resources to survive and are in a vulnerable situation. They can be accessed even if it has never been quoted or has not been done for a sufficient period of time. Non-contributory pensions can be for disability or retirement.

What should be considered when requesting loans for retirees and pensioners?

What should be considered when requesting loans for retirees and pensioners?

At the time of wanting to apply for loans for retirees and pensioners, we must take into account the type of pension being charged. The requirements will not be the same if the amount charged is for a retirement or disability.

In the case of loans for retirees, the lender will take into account the age of the applicant, both at the time of requesting the loan and at the time it is returned in full. In the case of disability pension loans, we will only be able to access financing if we are empowered to make financial decisions. Otherwise, it will be the legal guardians who must request that loan.

In addition, in the same way that happens with payroll, all traditional banks will take into account the amount of the pension to determine the amount of money that the applicant can access. In this case, pensioners are luckier than most workers: they have extra payments that will always be welcomed by banks.

Why apply for loans for pensioners?

Why apply for loans for pensioners?

Applying for loans for pensioners is the order of the day in our country. In our country there are a large number of families whose only source of income is a pension. Many pensioners have seen their purchasing power decline during the crisis, as pensions were frozen at the time, and then their increases have not been proportional to annual inflation. That is why many times these income are insufficient to reach the end of the month, especially if something unforeseen arises.

For this same reason, many of these users resort to loans for pensioners and thus have access to the liquidity they need at that time. Although it is true that most banks place limitations on age and amounts, there are more and more financing possibilities for pensioners in the financial market. Private equity financiers  can be an excellent option to apply for loans for pensioners.

Requirements to access personal loans for retirees

Requirements to access personal loans for retirees

With most banks or credit institutions, the requirements to access personal loans for retirees are the same as for any other client. In the case of loans for retirees, in addition, the age of the applicant will be taken into account.

Another requirement that the bank will take into account is the solvency of the pensioner. This will be calculated based on the amount of the pension you receive, your level of indebtedness at the time of requesting the loan and your credit history. In this article we detail how to request a loan.

We can afford to be much more flexible with these requirements, since our financing works with a mortgage guarantee. The essential requirement to access our mortgage loans for retirees is to present a property in property with no pending charges or with little pending mortgage to be able to cancel it. So we can offer our pensioner loans to many more people, even if they are included in delinquent lists. In this article we already talked about how to get loans for pensioners with asnef.   

Unemployed Loans – where to get it?

 

Getting a loan when you are not working is not an easy task. Many unemployed people find it difficult to apply for financing. But many times they are the profiles that need it most, precisely because they do not have a comfortable financial situation. So today we want to talk about loans for the unemployed.  

What are unemployment loans?

What are unemployment loans?

Unemployment loans, as its name indicates, are aimed at those who do not work. That does not mean that they are collecting unemployment, simply, that they are not working. 

According to the INE (National Statistics Institute), the unemployment rate in the country in the last quarter of 2019 was 13.78%. This means that the number of unemployed exceeded 3 million people. 

From these data it follows that there are many people in the country who do not have a comfortable financial situation, and may need extraordinary financing at some point. 

Who are the credits for the unemployed?

Who are the credits for the unemployed?

Unemployment loans are aimed at a wide variety of applicant profiles. Being unemployed does not necessarily mean that they are people who are not charging anything or that they are not spending their time for anything beneficial. They may be employed in other tasks, such as studying or starting their own business. Let’s give some examples of the unemployed: 

  • People who are collecting an invalidity benefit.
  • Retirees who have already reached the end of their working life.
  • Students full time.
  • Entrepreneurs starting to put their business idea into operation and they are in a very early phase of the process. 
  • People employed in their own home, looking after children or the elderly and who therefore do not have an employment contract. 
  • Unemployed in search of work and who are collecting the benefit, or not. 

Many times being unemployed implies taking greater control of household finances and spending more effort on saving. But this is not always possible and unforeseen events may arise that destabilize this planning. It is at this time that applying for loans for the unemployed can be a good solution. 

How can personal loans for the unemployed help you? 

How can personal loans for the unemployed help you? 

It is very common for unemployed people to need help to make ends meet. Whether it is to face an unforeseen event, such as a home renovation or repair or even to launch a new business idea. 

It is also not strange that taking advantage of the fact that one is not working, that time and resources are used to continue training or retraining professionally, in order to be able to opt for a better job. Whatever your situation, if you think that unemployment loans can be a good solution for you, do not hesitate to contact us. 

What is the maximum age for a loan repurchase?

Indeed, the maximum age for the repurchase of credit is established directly by the lender in complete freedom according to its reference grid. However, the banks agree on a theoretical age according to the profiles. Are of course concerned the retirees seeking to contract a repurchase of credits.

The age limit for obtaining a loan repurchase therefore varies from one establishment to another, hence the advantage of making a comparison of current market offers.

Note, however, that the main criterion for setting the age limit for the repurchase of credit is the duration of the repayment deadlines. So, can I buy back credit until age 75? 80 years old? 90 years? Here are the different cases.

Credit repurchase: up to what age is this possible?Credit repurchase: up to what age is this possible?

To determine the limit not to be exceeded for the senior borrower, it is necessary to study the duration of the repurchase of credit. More specifically, it is a question of looking at the date of the last repayment deadline.

Thus, for a repurchase of consumer credit, it must take place before the date of the 84th anniversary, to which six months are added. For a home loan repurchase or a mortgage loan, the last repayment deadline must occur before the 90th birthday of the subscriber.

An alternative exists for people whose last repayment deadline would reach 95 years maximum. It is a specific offer assimilated to a Project offer, which allows the release of cash in order to finance the preparation of an estate or even access to housing in a retirement home. This offer requires the agreement and information of the beneficiaries.

Age of credit repurchase: tenants worse off than owners

When borrowing, the lending institution seeks guarantees that it will be fully repaid.

Age is therefore an important criterion, the risk of death being the minimum coverage required.

Other guarantees may be included in the loan insurance backed by a credit repurchase such as disability insurance or loss of employment insurance. The latter notably allow the lending bank to cover itself in the event of a fall in income linked to the consequences of an accident in life, an illness or a period of unemployment.

As seen above, the owner of a property can opt for a credit buyout up to 95 years, in the sense that his loan end must occur at the maximum age of 95 years.

What about tenants? A tenant presents a riskier profile for a lender. Not being the owner of his home, his heritage is generally less than that of an owner. Institutions that make a loan consolidation offer are therefore more cautious and limit the age for the end of repayment of the loan consolidation to 84 years.

An increasing age limit for the repurchase of creditAn increasing age limit for the repurchase of credit

The age set by lenders tends to increase. Why? Because they take into account the lengthening of the lifespan. While at the beginning of the 1970s, the life expectancy of a Frenchman was 72 years, it is now estimated on average at 83 years, women ahead of men by a few years.

Technical and technological progress in terms of lifestyle, risk prevention, detection of pathologies and care provided favor this progression. However, banking establishments record this data to adapt their offers.

We can therefore project that in the coming years the age limit for the repurchase of credit will increase, provided that life expectancy continues its trajectory.

This phenomenon can also be associated with the lengthening of retirement. Indeed, the transition to retirement constitutes a step for the lending organizations. The higher the retirement age, the more the active borrowers keep cash inflows.

This observation plays favorably on another very important criterion: borrowing capacity.

Credit repurchase for seniors: borrowing capacity and state of healthCredit repurchase for seniors: borrowing capacity and state of health

Obviously, a bank will lend more easily to a person or a household with high incomes (as we have seen for the maximum age of a credit consolidation between owners and tenants!).

Seniors, if they maintain cash inflows, display an interesting profile when presenting a credit consolidation file. They may have practically completed the repayment of their mortgage, have assets or no longer have dependent children. Their borrowing capacity is enlarged.

All these advantages which encourage lending organizations to formulate an offer which will allow them to have only one installment to pay, at a more favorable borrowing rate, even if the borrowing duration is extended.

Also remember that the borrowing rate for retired seniors is roughly the same as that offered to a borrower aged 40.

On the other hand, the subscriber of a repurchase of credit of more than 65 years will have to be attentive to the insurance of loan which is associated. It is the amount of this premium that raises the overall cost of the credit consolidation. It is not so much the age which is discriminating but the state of health.

Generally, after 55 years, a medical questionnaire and further examinations if necessary are required. To minimize the impact of an additional premium, the senior should not hesitate to activate the lever of competition by taking advantage of the right to delegate insurance allowing him to initial an individual borrower insurance more suited to his profile.

 

Credit repurchase and home loan

What is a mortgage loan repurchase? It is quite simply the fact of soliciting a third-party lender organization so that it buys back the real estate loan contracted with your initial banking establishment. The objective of this operation is to reduce the monthly repayment deadlines thanks to an advantageous borrowing rate.

How does a credit buyback work? Are there any conditions or limits to this procedure? Can all borrowers access this solution? What are the costs of buying back a mortgage? To fully understand the commitments related to this operation and the benefits to be gained, it is better to be informed!

In which cases should you buy back a mortgage?

In which cases should you buy back a mortgage?

The repurchase of mortgage comes in two distinct cases. It is in particular a solution for people in a situation of financial fragility or even over-indebtedness. By activating the lever for the repurchase of a mortgage, individuals can find room for maneuver to meet their daily expenses or unforeseen bills. By picking up a lower mortgage repurchase rate, they manage to reduce the budgetary tension that is holding them.

In reality, the repurchase of mortgage can be interesting for any borrower. This is particularly the case when interest rates are low. The objective is then to buy back your mortgage in order to lower your overall cost. Anyone can therefore benefit from this operation provided they comply with certain recommendations.

When should you buy your mortgage?

When should you buy your mortgage?

The repurchase of mortgage does not systematically make savings, hence the interest to know and apply certain recommendations. Among these, the borrower should be concerned with:

  • the remaining term of the current mortgage: it must be greater than the elapsed term. Why ? Because at the start the borrower mainly reimburses the interest to the lending organization. The life of the mortgage must therefore be high;
  • the amount of capital remaining due: it must be at least $ 50,000 to $ 70,000;
  • the difference between the initial borrowing rate and the discounted borrowing rate: it must be at least between 0.7 and 1 point;
  • the duration of the operation: it must be anticipated because the procedure for buying back credit can be long depending on the file presented.

What are the costs of buying a mortgage?

What are the costs of buying a mortgage?

Redeeming your mortgage requires taking into account the costs inherent in the operation. It is these costs that are likely to make the repurchase of mortgage in the end not very advantageous.

So what is the cost of a mortgage loan buyout? The elements that go into the equation are:

  • the early repayment indemnities (IRA) invoiced by the lending organization that the borrower chooses to leave. Their cost represents the sum of 6 months of interest but cannot cross the threshold of 3% of the capital remaining due;
  • the administrative costs claimed by the new host lender;
  • the borrower insurance required by the new establishment which guarantees the loan in the event of repayment problems (death, disability, loss of employment). It can take the form:
  • a mortgage or lien of lenders of money (PPD) generating release costs;
  • a bond involving the payment of a surety commission (lump sum) and a contribution paid to the Mutual Fund (such as Lite Lender).

What is the difference between renegotiating and buying your mortgage?

What is the difference between renegotiating and buying your mortgage?

Renegotiation involves talking to your lender to lower the previously established borrowing rate. The takeover brings competition by calling on other lending organizations to find out their respective offers and then make a comparison.

The bank does not necessarily have an interest in entering into negotiations. However, it may want to keep the borrower and prevent him from going to the competition. But the latter must be attentive to the proposals of his bank which may include the subscription to other banking products such as insurance or even an investment product. It is up to him to question the interest of subscribing to this type of product.

The advantage of renegotiating your mortgage rather than buying it back is that the borrower does not have to pay the costs related to the change of lending organization (application fees, prepayment penalties, costs of a new guarantee) . Between the more attractive mortgage loan rate and the costs associated with the mortgage buyback operation, you have to know how to negotiate or be well represented!

Who are the players in the repurchase of mortgage loans?

Who are the players in the repurchase of mortgage loans?

To buy a consumer loan, the client can therefore turn to a bank, a specialized financial company (generally a bank subsidiary) or opt for an intermediary: the broker in the repurchase of mortgage loans.

The role of a mortgage loan buyout broker is to find the best offer in the current market based on the profile of the borrower. He studies the feasibility of the real estate loan buy-back request, supports the client in the preparation of his file, before submitting it to the banks and credit organizations for which he has received a mandate.

Credit repurchase and the obligation to domiciliate income

Since 1 January 2018, a lender who approves a mortgage redemption may require the subscriber to income domiciled in the facility for 10 years maximum.

In return, the borrower must be able to enjoy an individual advantage definitively acquired when the ten-year period ends. This is essentially a preferential rate or even a reduction in bank charges. The order of June 1, 2017 relating to home loan offers conditional on the domiciliation of the borrower’s wages or similar income on a payment account does not, however, indicate the nature or the importance of the individualized advantage.

The positive impact of this measure for the borrower is to quantify precisely what he gains or what he loses according to the absence or presence of the individualized advantage. The negative impact is that this period traps the borrower and the lender who could buy the mortgage. The first risks losing its advantage, while the second must align with it to capture the client.

With this measure, the borrower does not have an interest in starting the procedure only two years after having taken out his mortgage, the period being too fair to amortize the costs or take full advantage of the advantage.

Home loan repurchase: what is a amortization schedule?

Home loan repurchase: what is a amortization schedule?

A amortization schedule for a fixed rate home loan buyout is also called a repayment plan or schedule. Its purpose is to inform the borrower in detail about his repayment throughout the duration of the loan taken out.

The amortization table allows you to find out the capital remaining due, that is to say the amount of capital to be repaid. This data is essential to know whether it makes sense to buy a mortgage or not. The document also makes it possible to find out the share of capital repaid on each monthly payment and notifies the overall cost of financing, including interest and insurance costs.

I want to keep the same duration for my mortgage

To make the right decision, three scenarios exist:

  • the current mortgage is in its first third of repayment: you must get an interest rate for your new mortgage at least 1 point lower than the current one;
  • the current mortgage is in its second third of repayment: you must get an interest rate for your new mortgage at least 2 points lower than the current one;
  • the current home loan is in its third third of repayment: as a repayable loan, the repurchase of home loan is not advised because it brings back too little given the expenses generated elsewhere.

I wish to shorten the duration of my mortgage

I wish to shorten the duration of my mortgage

This opportunity is necessarily interesting but requires having additional income compared to your initial situation. If your income has increased, you can pretend to shorten the duration of the mortgage thanks to the redemption, while reducing the cost of credit and reducing your debt level.

What is the point of buying a home loan included in a loan group?

Credit consolidation is different from credit renegotiation. The first is used to buy back several credits in progress in order to subscribe to only one. The second is to renegotiate your credit on more favorable terms. Within a group of loans can be merged a mortgage, consumer loans and even bank overdrafts.

When buying a home loan via a group of loans, you must be careful that the debt ratio remains acceptable after the transaction (threshold of 33%). As such, the borrower should not hesitate to make a credit buyback simulation including a mortgage to know the feasibility of this operation.

The objective is always the same: to make savings compared to all the credits initially contracted to finance a new project, to generate cash, to have more visibility on its finances or even to rebalance a budgetary situation that is weak or likely to slide into over-indebtedness .