Generally, becoming a homeowner involves using a home loan. But its monthly repayment often weighs heavily in the household budget. So, when borrowing rates drop drastically, there is a strong temptation to use a credit buyback in order to take advantage of lower rates. But this operation involves taking precautions. This is why it is advisable to carry out a real estate mortgage redemption simulation before starting.
What is a mortgage repurchase simulation?
Simulation of repurchase of mortgage is the step of analyzing all the parameters involved, then calculating the financial cost to know whether it is advisable or not to make the repurchase in question. Contrary to what one might think, having subscribed to a mortgage at a higher rate than those practiced today does not guarantee savings.
What is the point of doing a real estate mortgage redemption simulation?
When a credit surrender is made, there are many things to consider in determining whether the transaction is profitable or not. This is precisely what the real estate buy-back simulation is all about. Among the criteria to be analyzed are the comparison of rates, but also the amount of surrender charges, or the proportion between the amount of interest and that of the capital repaid at each monthly payment.
Advice before making a mortgage repurchase
The repurchase of mortgage involves above all to obtain reliable information concerning the repayment situation. To do this, you have to ask your bank for a depreciation schedule. This document verifies the following:
- the amount of capital remaining due before the repayment of the next installment;
- 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 the interest and that of the capital. This point is particularly important because the repurchase of mortgage credit makes sense only when it allows savings on the payment of interest. It becomes useless when the monthly payments are constituted only by the repayment of the capital.
It is understandable that it is appropriate to proceed to the repurchase of credit as soon as possible, provided of course that the difference between the rates makes the transaction attractive financially. You should know that this operation has a financial cost that includes filing fees and prepayment penalties billed by the bank, but also warranty costs.