Whether it’s during a rough patch or just for convenience, loan redemption can be an attractive option. However, you must take your situation into account and be aware of all the parameters. Here’s a presentation of the basics of what you need to know.
Credit buyback: What is it all about?
It is generally aimed at households with several loans of any kind that wish to redeem them to improve their monthly cash flow. The grouping of loans concerns real estate loans, consumer loans as well as debts outside the banking sector (unpaid taxes, bills, etc.).
With a loan repurchase, you take several loans and group them into one. Indeed, each loan has a different duration and a different rate. This, by accumulation, can end up weighing heavily in the accounts each month. The idea of the grouping of credits will then be to take over all these debts, to have only one maturity date and to smooth the repayments over time. In this way, the overall amount repaid each month will be less and will give you financial breathing space.
Credit consolidation: how to proceed?
There are two scenarios for grouping loans.
First, there is your current bank. This one may be inclined to make you a proposal to pool the loans, whether they are at home or not. However, this is not always possible depending on their policy.
In this case, you will have to go to another institution, bank or not. Indeed, credit institutions are specialists in treasury solutions and can provide you with interesting options.
In any case, do not hesitate to make simulations at different institutions to find out their conditions and contact them. To carry out a simulation of credit grouping click here.
In which cases is it interesting?
First of all, if the succession of credits puts you in a precarious situation, a grouping of loans can enable you to rectify the situation and avoid going through the over-indebtedness box.
Secondly, in the context of a real estate purchase project, if the simulations show you to be above the maximum debt ratio (with the maturity of the real estate loan), the grouping of loans can help you to go through and carry out your project.
Finally, if you feel that your monthly payments are too high and you would like to have more slack for your hobbies or set aside, restructuring your loans may be a good idea.