We’ve all heard about the current drop in interest rates, but borrowers aren’t the only ones to reap the benefits. If you’ve already taken out a mortgage, you could in fact visit your bank and renegotiate your rate. He may huff and puff at first, but as long as you’re a good client, he will give in. This renegotiation could be worth about € 10,000, or three of four times that amount if you’ve got a more substantial mortgage.
You will however have had to have taken out your mortgage within the last five years (so that the interest left to pay is significant) and obtain a difference in rates of at least 1 point. This would be the case if you’ve borrowed at more than 4.50%, that is, before March 2009, as you’ll easily be able to obtain 3.50%. You’ll gain even more if you’ve got other loans to pay off (for a car or credit card), as rates are generally above 8%. All of your loans can then be grouped together and your banker will apply the more favourable rate.
You will though have to take into consideration certain costs- expenses for the dossier, fines for early loan repayment- which mean you’ll have to part with € 3000 or € 4000. If you’d like a specialised broker such as Sextant French Mortgages to take care of the renegotiation for you, you’ll have to part with more money too.
However, the table below proves it really is worth it. The new offer is shown to be at 3.45%, all loans included, compared to the old rates of 4.70% for the mortgage, 8.10% for the car loan and 18% for the credit card. Definite food for thought.
|Loan type||Mortgage||Car||Credit Card||New Loan Awarded|
|Capital left to pay||165 543 €||7 564 €||10 000 €||194 686 €|
|Duration||14 years||3 years||7 years||16 years|
|Monthly payments||1 320€||342 €||210 €||1 369 €|
|Total to pay||266 603 €||255 686 €|