Mortgage rates for a mortgage are constantly changing. For several years, these rates have been regularly revised downwards , sometimes a very significant drop. It is thus not uncommon to find a good financed at the beginning of 2010 at around 4%, which could, if it were currently subscribed, would be less than 2%.
On substantial sums, such as sums allocated to real estate financing , this significant difference in rates represents a significant saving.
It is thus tempting to have your mortgage bought back by another lender , at a better rate. However, be careful of the fees applied in the event of mortgage repurchase.
Prepayment indemnities (IRA)
The initial bank that financed you a property does not generally appreciate that its offer is bought by one of its competitors. This is why it almost systematically applies several prepayment charges . These fees are generally around 3% of the total amount due.
For example, if you have borrowed 200,000 us dollars to buy real estate, you will have to finance, in addition to the remaining balance, in the event of loan repurchase by another organization, in addition to the remaining balance, an IRA of approximately 6,000 us dollars.
Depending on the amounts borrowed, IRAs can amount to several thousand us dollars .
Furthermore, the issuing bank is not the only one to charge redemption fees . Indeed, the bank wishing to redeem the credit concerned also applies application fees.
Application fees and ancillary costs of mortgage repurchase
The administration fees applied by the new bank are, most of the time, around 1% of the total amount borrowed. To take the same example, if there is still 200,000 us dollars to redeem, the application fees alone will represent 2,000 us dollars.
These administrative fees, unlike IRAs, are, however, generally negotiable with the new bank.
In addition, in the event of a mortgage guarantee present in the subscription of the first loan, the mortgage lifting costs, notary fees and various guarantees are also due.
For information purposes only, when the mortgage repurchase costs US $ 200,000, the total amount due in the event of repurchase ( IRA + application fees + notary fees + miscellaneous mortgage fees ) is generally around 10 % , or nearly 20,000 us dollars.
The savings made in the event of redemption must therefore cover these costs to be profitable.