The redemption of credits is an operation that allows the home who has contracted too many credits, to be able to regain some financial comfort. This results in the implementation of a financial package adapted to the needs, but especially to the repayment capacity of the borrower. The amount of the monthly payment will then be adjusted to the latter, with the possibility of reducing it sometimes very significantly. In some cases, it can be reduced by up to 60% less than the total amount of maturities in repayment before the redemption. The lifetime of a 12-year loan buy-back, ie 144 months, can be an ideal solution to avoid a situation of over-indebtedness, but also to extend the repayment time in order to benefit from more serenity financial in everyday life.
Reasons to redeem credits
The credits involved in the purchase of 12-year credits are all consumer loans, personal loans, revolving loans, rentals with option to purchase, real estate loans, etc. The objective of the operation is to consolidate all the loans subscribed by the household in order to have to repay only one credit. In practice, this means that there will be only one monthly payment, with only one bank interlocutor to manage, which obviously simplifies all the administrative procedures but also the management of its debts.
The redemption of credits also makes it possible to negotiate a lower interest rate than previous loans, which in some cases can mean significant savings. The terms of the new loan agreement will be modified, mainly in terms of duration, because to obtain a lighter monthly payment, it must be extended. A duration of 12 years, that is to say 144 months offers the possibility to the borrower to enjoy more comfort over a period spread.
For this category of repurchase of credits, the regulation authorizes to include a mortgage, provided that it does not represent the majority of the capital to be bought back. This is called a purchase of consumer and real estate credits, but the share reserved for the latter must not exceed 60%, because in this case, it will be a repurchase of mortgage only. This one is different, and especially does not have the same conditions. In terms of duration it can go up to 35 years and its interest rate is based on outstanding mortgage loans in general, which are more interesting given the current market.
One of the major benefits of buying 144-month credits is that it can certainly prevent an over -indebtedness situation. As debt repayment conditions have been improved and redeveloped, it will be easier for the borrower to manage his budget. The decrease in the amount of the monthly payment, but also a fixed rate and revised downward are criteria that can allow the household to live better daily. If it is true that the lengthening of the repayment period will increase the total cost of credit, the household will see its debt ratio decrease. In addition, it will again be able to find a savings capacity, and on the other hand to finance new projects since its remaining living increases.
How to redeem credits over 12 years
This type of loan buy-back, which is considered a buy-back of consumer credit, has a maximum duration of 144 months. The law regulates consumer credit, which is why there is a regulatory term in place for all credit purchase categories. All borrower profiles are concerned for the redemption of credits over 12 years: tenants such as owners, employees, civil servants, as well as retirees and professionals or self-employed. The minimum duration granted for this repurchase category is 12 months, and depending on the capacity of the borrower, the amount of the monthly payment may be increased.
To obtain a 12-year credit redemption, the borrower must be between the ages of 18 and 75, but the criteria vary according to the lending institutions. If the borrower exceeds the age of 95 at the end of the credit repayment period, this type of redemption can not be granted. The amount granted over a period of 144 months of credit varies from € 200 to € 75,000 in general. However, depending on the financial institutions, this amount can reach 100,000 euros for tenants and even 200,000 euros for homeowners because they have a property that they can put in guarantee by a mortgage.
Thanks to the code of consumption, the borrower is protected, especially in recent years where different laws have been put in place. Very effective protective measures have emerged, such as the obligation for the lending agency to verify the solvency of the applicant, it must also give him a standardized information sheet and give him a period of reflection and retraction. As with all other credit transactions, the borrower has a prepayment right, provided that IRAs (prepayment indemnities) are paid.
The 12-year credit redemption simulation
The average interest rate obtained for a purchase of credits over 144 months now varies between 0.8 and 1.4%. The duration of 144 months is in principle chosen by the borrower according to its ability to repay and therefore its income. Making an online simulation is the first step in buying 12-year credits, as it will allow the borrower to receive several offers in record time. Most online organizations are intermediaries with multiple banking partners. It will therefore be very easy for them to offer the applicant the best offer, adjusted to the needs and expectations of the future borrower.
It is important to know that the repayment term of a credit surrender is adjusted to several criteria which are:
- The repayment capacity of the borrower
- The total amount borrowed, which may include all outstanding capital but also a sum of extra money (to finance a new project)
- The proposed interest rate
Once the online simulation is done, the borrower can get a pretty clear idea of the amount of his future monthly payment. The applicant can then be contacted by a consultant, a real analyst in charge of his file for a request for funding. In the context of a purchase of credits over 144 months, this one must respect all the parameters of the request and especially conform to the wishes of the borrower. The offer he will offer must therefore be in agreement with one side this will, the other its capabilities.
The parameter of the duration of the credit is an essential element because it is it which will allow to define the amount of the monthly payment. The shorter it is, the more the monthly payment is important and a contrario, the longer it is, the lower the monthly payment. On the other hand, longer terms increase the cost of credit. It will be the role of the counselor to find the best solution for the household to repay its debt in optimal conditions.