The premature repayment of a mortgage entails costs: the penalties provided in the loan contract , but also the processing fees and the costs of the release of the mortgage, if the bank has guaranteed the credit through this loan . However, certain situations can make this financial transaction advantageous if one calculates the true cost of a loan.
What is the weight of early repayment benefits (ARIs)?
A sudden return of money allows you to repay your credit before its term. If this idea seems immediately attractive, we must already make sure that it is possible, by studying the conditions provided for in the loan agreement. Some contracts may refuse this operation , especially if the amount paid is less than or equal to 10% of the amount borrowed.
Then, which early redemption fees (IRA) did you negotiate on signing? Without intervention on this point, they are proposed at the ceiling, namely to 1 semester of interest at the average rate of credit excluding insurance contribution, within the limit of 3% of the capital remaining due .
Can early repayment of a loan be beneficial?
Because of the costs inherent in the transaction, the early repayment of the loan is an expensive procedure, which usually requires the loan to continue as planned until its completion.
However, when interest rates are high , this deserves to be studied more closely, since the rate of inflation is then significantly lower than the rate of credit. As an indication, the difference between these two rates must be at least 1% for the operation to be interesting.
In the same vein, if the remaining term of the loan is greater than that already past , the costs are likely to be offset.
In addition, there are certain situations where the exemption of these penalties is possible : sale of housing, professional transfer, dismissal, loan at zero rate, employer loan, variable rate credit …
In other words, consider the weight of the IRAs in your policy, but also the benefits of placing your money , while continuing to repay your loan normally. As well as at the end of tax reductions on interest, in case of anticipation of repayments.
What is the cost of a mortgage discharge?
The calculation of this transaction continues with the presence of mortgage release fees, if the loan guarantee is based on your property. In fact, if the mortgage automatically ends one year after the last monthly loan has been honored , it can be lifted before this period, subject to paying the costs inherent in this operation.
They cover the notary’s fees, the real estate security contribution, the registration fees and the administrative costs, for a total ranging between 0.7 and 0.8% of the amount of the loan .
Amicably , this mortgage is translated into the performance of an authentic deed by a notary, targeted by both parties. If the bank refuses this release, the borrower can ask a court to decide : he will win the case only if the loan is already repaid or if the mortgage has already been automatically lifted.
Despite the urge, sometimes irrepressible to get rid of a mortgage, it is imperative to conduct a cost / benefit balance of an early repayment transaction. Do not hesitate to call on the expertise of a broker, to help you assess the situation.