Low interest rates are prompting French borrowers to look at the terms of their current credit (s) to determine if a buyout could be profitable for them. If so, what becomes of the Zero Rate Loan with your home loan?
Credit redemption: a reminder of the advantages and disadvantages
The redemption of credits is an operation that consists of collecting several loans in one, whatever their nature: consumer credit, mortgage, tax debts, etc.
The idea is to reduce the overall amount of all monthly payments by grouping them together. With a lower debt ratio, you thus find purchasing power, cash and you can negotiate better credit insurance for your new credit.
Naturally, this company has a cost : you will have to pay prepayment fees (IRA), bank fees, mortgage or bond fees, the cost of the borrower insurance, as well as brokerage fees. . Unless you work with a free Finn network broker!
What happens when there is a PTZ?
The redemption of credits supposes to settle all the loans in course, to have only one. As a result, what happens when the borrower has subscribed a PTZ?
Can we transfer it to another bank?
The zero rate loan is a device that can not be transferred because of its “assisted” nature . In fact, at its subscription, the bank benefits from State aid: however, no organization would agree to transfer this financial support, up to the remaining repayment term, as would be required by any change in the bank. PTZ. The transfer of a loan at zero rate then implies losing its free status in favor of a conventional interest-only loan.
Can we exclude it from credit redemption?
In other words, can one finance from another bank and keep its Zero Rate Loan from the bank that made the first loan?
In principle, the answer is “Yes”. Your broker during the renegotiation phase will work to obtain the best rate. It will be necessary to plan a PERTINENT adjustment of the monthly payments of the two loans.
But in practice, some institutions may insist that the PTZ repatriation be weighed in the balance. Unfortunately, in fact, banks can rely on a lack of collateral to impose it.
You are considering a buy back of credits and you have a PTZ subscribed, during a first mortgage? Ask for the help of a broker, to help you negotiate this transaction: on the one hand, you have every interest in avoiding the transfer of this zero-rate loan, on the other hand, the bank will do its best to obtain its transformation into interest-bearing loans, logically more profitable for it except in the case of an interesting rate. It is important to look at the total cost of credit and to compare the savings achieved. Here, the broker’s know-how and negotiating skills can make a difference.