A loan buyback transaction from a first loan consolidation is entirely possible. It may happen that a borrower has been repaying for a certain period of time, whether it is several months or even several years, a loan that has been put in place by a loan buyback transaction. It may unfortunately happen that in the meantime the financial situation has again suffered from an unforeseen event, a risk of life and that the household budget is once again unbalanced. A second transaction to redeem the first redemption of credits can then be requested and obtained without there being any particular brake. Of course, the lender will have to ensure the solvency of his client and certain conditions must be met.
The definition of a first and second credit surrender
The repurchase of credits is in principle a financial option decided by the borrower following the accumulation of too many loans. It makes it possible to assemble in a new loan all credits in progress, to which can be added debts of various kinds. The latter will be accommodated by a new monthly payment that may be revised downwards, as well as a new renegotiated interest rate. The objective of the operation is primarily to bring more comfort in the finances of the home, because when they are suffocated by too many credit dates, difficulties can accumulate.
Above all, it is a question of adapting the personal financial situation to the household’s repayment capacity. This means that the debt ratio that the rest to live must match well-defined criteria and allow the borrower to lead a pleasant daily financial life. The redemption of credits is divided into two categories: the repurchase of mortgage loans or the purchase of consumer loans. Each has its own eligibility criteria and is governed by its own legislation. When the remaining capital due represents 60% of real estate loans, the redemption of credits will be considered as part of the category of real estate purchases and will then benefit from its conditions, with the rates that accompany them. When the portion of the real estate purchase does not reach 60%, the buyback is part of consumer credit.
In the context of a buy-back of a loan pool, a financial institution may offer to take over such a transaction as much as possible and where appropriate. As for the first purchase of credits, the second purchase consists of readjusting its monthly loan payments, to readjust them to the current situation of the borrower. The goal is obviously also to take advantage of a more interesting rate and reschedule the repayment period to reduce the amount of monthly payments.
The two operations, even if they were performed at different times and time-shifted, each allow for additional cash flow. It can be used to finance a new project, or to build a small reserve of security money.
Reasons for a repurchase redemption
It sometimes happens that during the first loan buyback operation, also called debt restructuring, the borrower is not included all credits in repayment, or that he has not also integrated additional cash.. It may also be that this sum of money has not been well enough estimated. As a result, the borrower disposed of it much faster than expected and was unable to finance all the desired projects.
Other expenses have since plagued household finances, such as work, a new car, new equipment for the home, and so on. They were financed by new loans that eventually accumulated. Another reason why the household may need to restructure its debts again is the employment situation that has been challenged, whether it is a job loss or a temporary or long-term incapacity for work.
Advice for a repurchase redemption of credits
While there is no real pitfall in repurchasing a redemption of credits, it is important to understand that this action will result in new fees. These will be mainly in the total cost of credit, because of the lengthening of the repayment period. A second operation will therefore necessarily result in a second increase in fees. That’s why you have to be fully informed before you start, because this is a new financial package and therefore a new debt to pay.
On the other hand, it is very important firstly to compare the various offers of repurchase of loans, and secondly to address a competent organization with a specificity in the field and experience, as well as a good reputation. Only an institution specializing in this type of banking operation will be able to provide a personalized response to each request, modeled on the real needs of the household with a tailor-made offer. Online applications are free and non-binding, and at first they give an idea of the feasibility of the project.
The documents requested during the second loan redemption operation are, in general, identical to the first request.
The conditions for a repurchase redemption of credits
To redeem its loan pool, the previous transaction must have a minimum of seniority. This criterion varies according to the banks, but in general, it must be at least three months prior. Of course, the debt ratio is a key element, it must remain within the limit of achievable for a home, even if in some cases it exceeds the 33% set as a general average by banks and credit agencies.
The number of loans to be bought back is also studied, if it is beyond reasonable, the operation is unlikely to succeed. For example, a borrower who already repays 6 credits will find it more difficult to find financing than one that owes only 3 monthly debts. Attention also to the rejection of levies on the credits, they are a real handicap for a candidate for a second repurchase of credits.
Owning a property is an asset in such an operation, because the loan can be guaranteed by it. Likewise, when the borrower has a family mortgage surety, it may facilitate a new loan to be repaid for a second redemption. Good to know also: when the mortgage ratio allows, homeowners who have already subscribed to a mortgage loan will be able to obtain a larger amount of money through the purchase.
In all cases, even when the repurchase transaction of the first loan consolidation is feasible, the conditions are more or less strict and each lending institution will have set its own criteria for accepting a file. The experts who analyze the applications must respect specific rules, since the law strictly regulates the market for the purchase of credits. It is therefore very important to turn first and foremost to a reputable and serious organization to obtain on the one hand a new financing of credits in progress and on the other a cash added to the total amount borrowed.