Generally, becoming a homeowner involves having to take out a mortgage. But its monthly reimbursement often weighs heavily on the household budget.
So, when borrowing rates drop drastically, there is a strong temptation to buy back credit so that you can take advantage of lower rates. But this operation involves taking precautions. This is why it is advisable to carry out a mortgage buyback simulation before getting started.
What is a mortgage buyback simulation?
The mortgage buyback simulation is the step consisting in analyzing all the parameters taken into account, then calculating the financial cost in order to know whether it is wise or not to proceed with the buyout in question. Because contrary to what one could believe, the fact of having taken out a mortgage at a higher rate than those practiced today does not guarantee to make savings.
What is the point of making a mortgage buyback simulation?
When buying back credit, there are many factors to consider in determining whether the transaction is profitable or not. This is precisely what the real estate loan buyback simulation is for. Among the criteria to be analyzed are the comparison of rates, but also the amount of redemption fees, or even the proportion between the amount of interest and that of the principal repaid during each monthly payment.
Advice before buying a mortgage
The repurchase of a mortgage requires first of all to obtain reliable information concerning the situation of repayment. To do this, ask your bank for a depreciation schedule. This document verifies the following:
• the amount of capital remaining due before the reimbursement of the next monthly payment;
• the amount of the monthly payment excluding insurance;
• the amount of interest;
• the amount of capital.
These elements make it possible in particular to determine the percentage between the amount of interest and that of capital. This point is particularly important because the repurchase of mortgage does not make sense that since it allows us to realize savings on the payment of interest. It becomes useless when the monthly payments are made up only by the repayment of the capital.
We understand that it is necessary to proceed with the repurchase of credit as quickly as possible, provided of course that the difference between the rates makes the operation financially attractive. You should know that this operation has a financial cost which includes administration fees as well as prepayment penalties charged by the bank, but also warranty fees.