Faced with the recurring drop in rates observed in recent years, more and more of you are thinking about buying back credit. It is true that this operation can reduce the cost of credit substantially by lowering rates. However, it is important to remain vigilant because the operation is not without risk. So that you can make the right choice, here are the mistakes you should avoid making.
Mistake 1: go headlong without thinking
It is imperative that you keep your lucidity permanently and that you take the time to think. A repurchase of credit cannot be decided on a whim. You have to weigh the pros and cons. Many criteria must be taken into account in order to determine the expediency of the operation, the proposed rate, the costs incurred, the new duration of the credit. If possible, consult an advisor beforehand so that he can help you assess the benefits of a credit buy-back.
Mistake 2: minimizing incidental costs
A repurchase of credit involves new charges for you. In particular, it involves the payment of new administrative costs and possibly new insurance costs. As part of a mortgage loan, you will no doubt need to re-register your mortgage. All these charges must be taken into account in the evaluation of an offer. Generally, a loan buy-back optimally covers these charges if and only if the rate differential is greater than 0.7%. If you find a rate lower than 1%, you will be guaranteed to save money.
Error 3: do not compare
Do not rush on the first offer. Although it may be interesting, you should check that there is not another that offers even better conditions. Use a credit comparator that will list all available loan offers so you can have a wider choice. This tool is completely free and does not commit you to anything. Thanks to the credit comparison tool, you will be sure not to miss out on the best opportunity.
Mistake 4: purchase additional funding beyond the tolerable threshold
It is not uncommon for a repurchase of credit to be accompanied by additional cash. Thanks to the repurchase of credit, the debt burden of the borrower can be reduced and the latter is often tempted to take out new loans. It is necessary to remain cautious and limit your new commitments. The main objective of a credit buy-back is and must be mainly to bring your debt ratio to the right level, not to make it worse.
Demand transparency so that you can make an informed decision. Institutions must provide borrowers with a standardized information sheet detailing their offers. This sheet will allow the borrower to know all the conditions of the offer and to compare it with other offers.