Loan purchase with mortgage
June 3, 2019
The purchase of mortgage credit, exclusively for borrowers owning real estate, is a solution to consolidate several credits and / or reduce monthly payments through a lower interest rate or an increase in the repayment term.
Replace a mortgage loan
Mortgage Loan Redemption can be understood in two ways:
- replacement of mortgage credit;
- grouping of credits with guarantee by mortgage.
The first situation is for borrowers who have taken out a mortgage. They have mortgaged one or more properties to acquire a new loan and develop their assets. In this case, the mortgage buyout will simply replace the existing mortgage. In the event of financial difficulties, this new credit will be spread over a longer period, which will have the effect of reducing the monthly repayments to be reimbursed each month.
Borrowers may also want to simply benefit from more attractive interest rates. Instead of renegotiating their loan, they can buy it back. The mortgaged property initially remains as security for the newly granted loan.
Group credits with a mortgage
A mortgage purchase may also be a combination of several credits with the mortgage on the property owned by the borrower. For example, when a borrower has purchased a home loan for the purchase of their principal residence and a car loan, they may have an interest in consolidating them. A single credit is then made from a single credit institution.
But the latter can ask for a guarantee. In addition to the use of a family guarantor or surety, the borrower may mortgage his residence to receive a new loan to balance his budget.
Vigilance on the purchase of mortgage credit
Admittedly, the solution of the repurchase of credit with mortgage seems interesting and little risky to limit its monthly payments. However, the borrower who loses his job and his income may no longer be able to pay his installments. The bank that has been credited will then be entitled to seize the property and put it on sale to repay the money that the borrower has not paid.
In addition, the purchase of mortgage credit involves fees. The mortgage must indeed be carried out by a notary.