Do you have a home loan and personal loans or consumer credit? You did the math, you need a credit buyback with a high amount . If the amount exceeds USD 200,000, it will necessarily be a mortgage purchase.
Should we buy back his mortgage?
If your mortgage is at a variable rate, it is prudent to convert it into a fixed rate. If it is not possible to renegotiate with your bank for the passage in fixed rate; we offer you a repurchase of the mortgage at the same time as the purchase of the consumer credits. Fixed rates are low when a mortgage is offered as collateral for the repurchase of credit. And even lower, when the share of mortgage represents more than 60% of the total credit pool (mortgage and consumer credit).
But buying back your mortgage leads to prepayment penalties of 3% of the outstanding capital and notary fees if a mortgage is placed on your house. An extra cost but to get a lower rate. This is why we are studying all the possibilities (with a real estate loan or not) and we are considering the loan buyback formula that will prove to be the most economical for you.
Consumer Credit Buyback Banks Watch Your Expenses
For a repurchase of credit with a high amount, the specialized banks will linger over your repayment ability. In addition to the future reduced debt ratio thanks to the repurchase of credit and the new, much lighter monthly payment; a cash balance will be calculated. This is a tool that allows you to know if your new monthly payment will allow you to return your “budget afloat”.
Here is an example :
You have a monthly income of USD 3,000. You have a total of USD 2,000 monthly consumer credit. And you spend USD 2,000 each month on your expenses (water, electricity, gas, telephone, insurance, transport costs, taxes, food, leisure …). Your credit redemption will have a maximum monthly payment of USD 1,000. Because you are already spending USD 2,000 on fixed charges, you only have USD 1,000 left for the credit consolidation.
For the same income of 3,000 USD, if your expenses are 1,500 USD, at that time, the monthly repayment of loan may amount to 1,350 USD or 45% of your income.
With experience, through the implementation of credit buybacks, we are familiar with the various criteria and we have set up a guide for the purchase of credit internally. Debt restructuring studies in all aspects: the maximum amount, the debt ratio and the cash balance are three important scoring indicators.