To reduce its monthly payments, you have the possibility to use a credit redemption. This operation will automatically generate various costs that it is important to analyze in order to know if the regrouping of credits is interesting to carry out. IRA, fees, guarantee or mortgage, how much does a refinancing actually cost?
Early repayment benefits (IRAs)
Among the expenses incurred during a credit redemption include IRAs, prepayment benefits. The amount of these benefits varies according to the nature of the credit subscribed. As part of a real estate loan, the amount of the IRA is set at 3% of the remaining capital in the Consumer Code. These allowances vary from 0.5% to 1% in the context of a consumer credit. Following a negotiation during the subscription of the loan these expenses may have been canceled or their amount decreased. The IRA will nevertheless be maintained if the repurchase of credit is made by a competing bank.
Fees or brokerage fees
A repurchase of credit, like any type of banking operation, generates filing fees that will be claimed by the broker or the bank proposing the new loan. These fees generally represent 1% of the amount borrowed and can be negotiated or canceled depending on the quality of the borrower’s file. These fees or brokerage fees are only payable if the request for repurchase of credit is accepted, otherwise no fees can be claimed.
Since a consolidation of credits leads to the subscription of a new loan, a new guarantee must be subscribed. The cost of this guarantee depends on its nature, if it is a deposit proposed by a surety, (a little less than 2%). As part of a mortgage loan redemption, it will pay the land rental tax, about 0.715% of the amount borrowed and mortgage fees that amount to 2% of the loan amount.
The borrower insurance
When a loan is repurchased, the banks advise the subscription of a borrower insurance which will take over in the repayment of the monthly payments if the borrower is victim of a “accident of the life”, even if this insurance is not not required and not systematically required by banks in the case of a credit consolidation.
This insurance covers death, temporary incapacity for work and permanent and permanent disability. In order to benefit from insurance at lower cost it is also possible to benefit from a delegation of insurance: the cost is from 0.07% to 0.14% against 0.40% to 0.60% for contracts groups offered by the banks.