Interest rates applied to mortgages continue to fall.
Indeed, despite a slight increase last spring, rates are starting to decline again since July. Given the current economic situation (low inflation, monetary policy stimulus from the European Centrum Bank), this decline will no doubt be in the long run.
This low level of interest rates is good news for future real estate buyers, who will be able to take over their investment and at a lower cost. This also represents an opportunity for those who have a current home loan. So, it’s time to renegotiate your loan terms with your banker. Currently this query is commonplace. Most of the time, you will get a proposal from your bank advisor.
At the same time, you can solicit competition as part of a loan buyback.
The main interest of the renegotiation is the circumvention of the costs generated by a new loan offer (credit redemption by the competition). If you accept the renegotiation offer made by your banker then you will benefit from a lower interest rate on your mortgage, with a positive impact on the duration or the amount of your monthly loan. The costs to be incurred in the context of a renegotiation are less than in the case of repurchase of real estate credit by the competition. Nevertheless, the competition will probably offer you better conditions, ie a lower interest rate. For you to earn money, it takes on average one point difference between your current rate and the proposal of the competition.
Conversely, you should know that the last part of repayment (the last third, the last seven years for a loan of 20 years), the majority of the remaining periodic repayments consist of capital since the amount of interest is declining . In other words, we recommend more renegotiation if there is little amortization.
Finally, consider also comparing the costs associated with a credit buy-back by the competition. In fact, assume that the bank will ask you to house your income and savings in parallel with this credit redemption. It is therefore essential to know the costs associated with current operations and services (checking account, credit card, transfers or even insurance).