This is a subject that comes back very little on the web and which nevertheless has a great importance: the costs related to a grouping of loans.
Group your loans: it’s free?
The repurchase of loans is a banking operation set up by banks or brokers with the purpose of reducing the amount of the monthly payments. This is an operation administered by financial companies, ie it is not a free formula.
Some associate too quickly the notion of pooling loan to that of over-indebtedness (managed by the Bank of France) or Cresus, a federation that fights for over-indebtedness, but that is not the case. The repurchase of loans is a banking operation in the same way as the loan, so there is a related expense, yet it is necessary to know them.
Cost of a loan buyback
Costs vary depending on the amount of loans to be redeemed and the presence or absence of a mortgage guarantee. A homeowner borrower with at least one home loan will often have to resort to a mortgage to buy back his loans.
Cost related to early repayment
The first loan surrender charges are those related to the repayment before the expected term of the loans. You may not know, but repaying your loan before the end date generates costs, they can not exceed 3%. Let’s say that a borrower is currently repaying a personal loan of 5000 € (with insurance and rates included) over 48 months (4 years), which makes him a monthly payment of 104.16 €. After a first year he has paid (€ 104.16 x 12 months) € 1250 and he decides (following a big cash inflow) to pay off his loan.
He will have to pay the remaining amount to be reimbursed, ie € 3750 + € 112.5 (3% of the amount) of the early redemption fee (roughly, the amount of a monthly payment).
Costs related to file editing or brokerage fees
The analysis of the request, the formulation of the offer of regrouping of loans, the edition of the offer, the expenses of mails, etc … are all free when one carries out a project of redemption of loans up to the signing of the contract. This contract provides for brokerage fees or file costs that remunerate (which is still logical) the provider who assembled the refinancing file. They vary between 2% and 7% of the amount granted.
Cost related to the mortgage
In the context of a real estate loan buyback with mortgage guarantee, there are also costs to provide, they are 0.615% (tax land registration).