If the common point between the repurchase of mortgage credit and the consolidation of credits is to offer the debtor the chance to reduce his debts , the two financial techniques differ on certain points.
Credits for different subjects
Rates change, sometimes they go up, sometimes they go down. However, when you find yourself in a convenient situation where the beautiful villa next door is for sale, you seize the opportunity by making a mortgage. The rate negotiated at that time seems higher than the current one. This is where mortgage repurchase comes into play, the objective of which is to benefit borrowers from low rates , even with a current contract. Here, the loan concerns a mortgage.
A family has taken out several consumer loans ( personal loan, revolving, personal microcredit, etc.). She also has other debts, which considerably increases her monthly charges. One solution is effective in avoiding over-indebtedness and in organizing debt management : credit consolidation. It is quite simply a matter of bringing together all the files of current credits into a single file. The objective is to reduce the reimbursement costs of the family.
NB : there may be in the grouped credits, a mortgage. In this case, if the share of this mortgage represents more than half of all the loans grouped together, the new file will be processed according to the provisions applicable to mortgage loans, so it will be a mortgage repurchase. Otherwise, the new contract will follow the rules usually used for credit consolidation.
What about the loan repurchase procedures?
The procedures for the 2 types of financial solutions are more or less the same. They can be negotiated within the debtor's bank itself. But it happens that the bank is reluctant and sometimes refuses to consolidate or buy back the outstanding loans. The debtor will have no choice but to go to another establishment . It is clear that the operation becomes complex, only with the help of a loan broker, the borrower will have a small chance of finding a good compromise.
It should be noted that the 2 transactions entail costs and charges related to this change of file, including brokerage fees. The borrower must undergo the early repayment of his credits . For the case of mortgage repurchase, he must consider the guarantee costs.