Credit purchase: conso or hypo, which solution to choose?

Credit purchase: conso or hypo, which solution to choose?

 

 

There are two types of repurchase of credit (redemption of all or part of your loans to pay then only one monthly payment): the repurchase of credits conso and the repurchase of credit mortgage. The Credither Guide explains the differences between these 2 repurchase transactions.

Repurchase of consumer credit and mortgage repurchase, what differences?

Repurchase of consumer credit and mortgage repurchase, what differences?

To begin, let’s go back to the objectives of these two operations. As its name suggests, the consolidation of consumer loans aims to consolidate only its consumer credit : personal loan, revolving credit, car loan, etc.

Conversely, the mortgage buyout includes a home loan in the transaction. The “mortgage” character is explained by the fact that a guarantee (a mortgage in this case) covers the bank in case of loan repayment problem.

Which solution to adopt?

Which solution to adopt?

Each solution has its advantages and disadvantages. For the consolidation of consumer credit, the borrower insurance and the mortgage are not mandatory. You therefore have no insurance fees or notary fees to pay. Problem: the interest rate on buying back consumer loans is higher.

On the other hand, by grouping your real estate and consumer loans, the interest rate is lower. Your file is also more likely to be accepted because of the mortgage guarantee. Disadvantage ? The transaction costs are higher with the application of mortgage fees and insurance fees.

Regardless of these “strengths” or “weak points”, the choice between one or the other operation depends on other criteria: the interest rate of the loans, their durations or even the value of the mortgaged property. For example, if the value of your home is not enough to cover all your loans, you will only be able to partially pool your credits (this is called a partial credit surrender).

Another particular case is that some households do not want their home loan to be included in the buyback transaction. In fact, they had previously obtained or renegotiated real estate financing on terms that were so attractive that they could hardly get better. They therefore only include their consumer credit.


Leave a Reply

Your email address will not be published. Required fields are marked *