Why and when should a credit renegotiation be initiated?

Credit renegotiation is a financial process intended to create both greater flexibility and/or great savings for the borrower. However, in order to be able to envisage such an operation, certain conditions must be observed and the steps prior to any request must be strictly observed.


Why want to renegotiate your mortgage?

Why want to renegotiate your mortgage?


Today, the context is favorable for the revision of your mortgage, even when it is only 2 or 3 years old! Indeed, interest rates are still extremely low!

In December 2018, a good file can obtain rates of 1.40% over 15 years, 1.60% over 20 years and 1.80% over 25 years. Note that an excellent record can further lower these percentages, to obtain 1.05%, 1.17% and 1.25% respectively!


When to initiate this process?

credit loan

But beyond the reasons which can motivate a renegotiation of credit, it is imperative to satisfy three conditions , under penalty of being rejected the request:

  • The outstanding capital must be greater than $ 70,000
  • The application must be done ideally in the 1st third of the remaining term of the loan or at the beginning of the 2nd
  • The difference between the mortgage rate and the rates traditionally applied at the time of the request must be at least 0.7 point, ideally between 1 and 2 points.


The 3 steps prior to a credit renegotiation

The 3 steps prior to a credit renegotiation

If the above conditions are – a priori – observed, the borrower can continue his process by scrupulously following these steps:

  1. Know the remaining cost of the mortgage

To do this, simply bring your mortgage loan and refer to the final amortization table in the appendix. Even if the presentations can be different from one organization to another, the borrower can quickly know the amount of principal remaining due, as well as the weight of interest and insurance on its monthly payment, on the date it wish.

  1. Get a loan simulation from the bank

Once this amount has been determined, the borrower can request a loan simulation from his bank for a mortgage to the extent of this outstanding capital . Please note that the document obtained must not only offer more favorable conditions than the present contract of the debtor, but also offer a difference of 0.70 or 1 point in order to continue the process.

  1. Work on your argument

Before requesting an appointment, a credit renegotiation is carefully prepared. Already, it is necessary to determine what the objectives are : to improve your purchasing power or to reimburse faster.

Once this essential point has been clarified, it is a matter of taking care of your file : guarantee of dealing with a good payer, income is domiciled in the bank, the borrower has solid financial investments and savings…

Finally, the borrower must have offers from competitors to indicate to his banker that he knows what he can get in another establishment.

Faced with a financial professional, it is advisable to be solidly prepared… Why not call upon a negotiation expert, who knows this sector of activity perfectly? Discover, through this white paper, how a broker can carry out a better renegotiation of credits than you!

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