What guarantees are required for a loan buy-back?

The level of guarantee requirement of a financial institution fluctuates according to the amount of the credit buy-back, the nature of the loan (mortgage, consumer credit, revolving credit, bank debts, etc.) and the number of loans that it brings together. The financial institution also analyzes the profile of the borrower, his personal, professional and financial situation to better assess his debt ratio, his borrowing capacity and therefore, ultimately, the risk of non-repayment of the loan..

Not everyone can provide equivalent guarantees, like a tenant versus an owner who can mortgage their property. So, from mortgage loans to joint and several guarantees, from pledging of investments to voluntary transfer of wages, what are the options available to borrowers and their implications?

Here is an overview of the guarantees in the context of a loan buyback likely to result in your efforts to benefit from the advantages of a debt consolidation: the reduction of your monthly payments, the simplification of the management of your budget and the savings generated by the possible fall in the interest rate.

What guarantees are required for a loan buy-back?

What guarantees are required for a loan buy-back?

As part of a loan buy-back transaction, the lender generally requests a guarantee from the borrower. Thus, in the event that the latter fails to repay, the bank can call on the guarantee and obtain payment of the debt.

There are a number of guarantees intended to finance the repurchase of home, personal or consumer loans. Depending on the analysis of the transaction and the borrower’s situation established by the financial adviser, these guarantees are adapted. Among them, the main ones are:

  • mortgage guarantees, which include the mortgage and the lender’s lien;
  • joint and several surety of a natural person or a surety company;
  • the redeemed;
  • the pledge of savings contracts (life insurance, term account, etc.);
  • voluntary assignment on wages.

The repurchase of credit with mortgage guarantee

The repurchase of credit with mortgage is reserved for the owners within the framework of a repurchase of mortgages. The mortgage consists in granting the right to the lending organization to cover itself in the event of default of the debtor via the real estate. The financial institution can thus seize and then auction off the house or apartment, and be reimbursed on the money collected during the operation. It is a traditional guarantee during a repurchase of credit which is obviously not without risk for the borrower.

The loan with mortgage guarantee requires going before a notary, the only person authorized to finalize the procedure. The notarial act has a cost which must be taken into account in the overall calculation of the loan repurchase. Among these costs, it is necessary to mention:

  • the fees of the public officer,
  • costs of land advertising,
  • the land advertising tax
  • registration fees.
  • buying back a mortgage also entails the payment of mortgage release costs, if such a guarantee had been taken for the previous financing.

In the context of a repurchase of home loans, it is also possible to request a PPD (privilege of lender of money). Less expensive than a mortgage, this solution is however limited: it can only guarantee an old property. Any works or constructions included in the operation cannot therefore be guaranteed via a PPD.

Good to know : for the mortgage to be valid, it is recommended that the amount of the repurchase of a mortgage does not exceed 80% of the value of the property estimated by the notary or a real estate agency.

Guarantee your credit repurchase with a surety

Guarantee your credit repurchase with a surety

The repurchase of credits with mortgage is not the only option to guarantee a restructuring of its debts when one is owner. The latter may also have recourse to bail.

If the guarantor is a natural person, we speak of a joint guarantee for a credit buy-back. This person is therefore also united in the event of default in reimbursement. In other words: the lending institution can require the surety, a relative for example, to pay a due date in the same way as if it were it which had taken out the loan. This type of collateral is mainly used for small loans such as student loans or consumer loans.

For the repurchase of credit, the guarantor can be a legal person in the form of a mutual guarantee company which practices the mutualisation of risks. The subscriber pays a sum proportional to the redemption of credit placed on a guaranteed fund. In exchange, the guarantee organization undertakes to pay the claims in the event of default. This recourse costs on average between 2% and 3% of the credit repurchase.

When consolidating loans, the surety draws its interest in two situations:

  • the mutual guarantee organization avoids taking out a mortgage guarantee;
  • mortgage guarantees make it possible to find a third party likely to put their property in addition to the guarantee (for example the property of direct ascendants).

The repurchase in guarantee of the repurchase of credit

A borrower can guarantee his repurchase of credit by operating a repurchase which is defined in law by the capacity of the seller to buy back the property sold (without obligation to do so). The time to recover the property varies between 6 months and 5 years.

The repurchase is a possible solution in the event of less cash receipts or a bank card. The advantage is that the seller can continue to live in the property even if he is no longer the owner.

The money obtained through the real estate transaction gives him a substantial contribution to take out a larger loan buyback able to repay his old loans in progress. The operation results if necessary in eliminating its filing at the Banque de France. He then finds a reorganized financial situation to buy his property as the repurchase authorizes him.

Pledge as collateral for credit repurchase

The pledge is a contract made between a debtor and his creditor, the first handing over something to the second as a loan guarantee. For example, it may be a life insurance policy or other secure financial savings products such as a term account. The collateral is then blocked during the loan period.

In the event of default in the payment of maturities, the lending organization recovers the pledged products to sell the securities and reimburse themselves with the money from this operation. This alternative has the advantage of generating low costs but is mainly intended for individuals who have a large portfolio of securities (securities, stocks, etc.).

Good to know : if the sum pledged is less than the amount of the credit repurchase, an additional guarantee can be claimed by the bank.

The borrower can also pledge property as collateral for grouping loans like a vehicle. The pledged property cannot then be sold without the agreement of the financial institution or only when the total repayment of the loan is made.

Voluntary assignment on salary as a guarantee of credit repurchase

To take more security and validate the repurchase of credit, the lender can demand an assignment on pay. The latter ensures the payment of monthly installments by directly deducting the amount from the salary. This attachment of wages is carried out via the employer, the latter not being informed of the reason.

Voluntary assignment on pay is often inevitable for owners as well as for tenants whose debt ratio is high and the amount of credit bought back consequent. An employee who chooses to arrow part of his salary voluntarily towards his creditor completes a declaration to this effect at the registry of the district court.

The law regulates the transfer of wages:

  • it notifies a maximum quota not to be exceeded;
  • it establishes a legal minimum for the remainder of living for remuneration in 2018 of less than $ 21,760 / year (example: a ceiling of 1/10 th of the amount for annual remuneration between $ 3,760 and $ 7,340);
  • it excludes certain amounts received (example: family allowances paid by the employer).

Loan insurance for credit repurchase

Loan insurance for credit repurchase

The lender can also apply for additional borrower insurance : it is disability death insurance which can be supplemented by insurance in the event of sick leave and loss of employment. It is a cover for the financial institution in the event of death or accident of life, but also for the borrower who avoids placing on his family the burden of the repayment of the installments. This is borne by the insurer up to the guaranteed percentage and the damage suffered.

In the context of a repurchase of credit for retirees, its cost is far from being negligible. It is possible to negotiate with the financial institution or to use the insurance delegation to take out personalized credit insurance more suited to the borrower’s profile. Note that loan insurance can now be canceled during the first year of the contract or on the anniversary date. The only condition is that the level of cover is at least equivalent.

Credit buy-back without guarantees: is it possible?

Credit buy-back without guarantees: is it possible?

Redeem a loan without having to provide collateral? Yes, it is possible. This solution simplifies the file, avoids a certain number of administrative formalities and saves on warranty costs.

However, this possibility is subject to the appreciation of the bank. Thus, borrowers with a very attractive profile for the lender (significant wealth, level of income, etc.) will be able to claim a loan buy-back without guarantees.

It is therefore necessary to prepare your dossier well and to highlight its strengths. Obtaining a loan repayment without collateral is also possible when financing small amounts, in particular in the context of financing personal debts and consumer loans.

Credit for retirees: under what conditions?

The retirement period is an opportunity to satisfy many personal or family projects (moving, travel abroad, housing work, rental investment, etc.). But it’s all about money.

With the decline in income, are the personal or real estate projects of retirees still financable through credit solutions? Is there an age limit for consumer credit? Is it possible to borrow after 75 years? Is the mortgage loan insurance rate based on age exploding? So many questions about the credit for retirees who tease you. Rest assured, we tell you everything.

Credit for retirees: for which projects?

Credit for retirees: for which projects?

16.1 million is the number of retirees in France identified by the Research, Studies, Evaluation and Statistics Department of the Ministry of Health (DRESS) who received a pension at the end of the year 2016. Adding up those receiving a survivor’s pension, this figure climbs to 17.2 million.

The 60 and over age group should form a quota of 20 million people by 2030 because of demographic aging but also the increase in life expectancy (better lifestyle, technical and technological developments in disease detection, risk prevention campaigns, particularly in the workplace, etc.).

In terms of resources and after social security contributions, the average pension amounted to $ 1,294 / month, with a certain difference between women ($ 1,070 gross / month) and men ($ 1,740 gross / month). The fall in income at the time of retirement is estimated between 15% and 40%.

However, a retiree is a consumer like any other, who also tends to spend more (travel, leisure, development work, rental investment, intergenerational assistance, etc.). This is called the silver economy (or economy of seniors), a branch of activity which brings together all providers of services and products intended for the elderly in health, transport, security or even habitat.

The tax credit for non-taxable retirees

The tax credit for non-taxable retirees

Are you retired and not taxable? Then the tax credit is a solution available to you. All home service activities such as meal preparation, laundromat activities, assistance, transport, cleaning, gardening or DIY are concerned.

This wide variety of activities on offer allows retirees to benefit from a reduction of 50% of the sums committed in this context. At most, the expenses giving entitlement to this allowance are capped at $ 12,000 for a single person and $ 20,000 for a couple.

Personal loan for retirees: a relevant financing solution

Personal loan for retirees: a relevant financing solution

Admittedly, retirees’ incomes are sometimes too limited, but they can count on credit solutions to finance their trip abroad, the replacement of a vehicle or the performance of interior fittings in their house or apartment. They can take out consumer credit quite easily because their borrower profile is considered reliable by banks and lenders for at least three reasons:

  • their retirement constitutes stable income, the specter of unemployment being eliminated;
  • 80% of seniors own their homes, some having even completed the reimbursement of their monthly payments;
  • retirees have a high debt capacity.

Not only does consumer credit ignore age, but it can be obtained on advantageous conditions for the reasons mentioned above. To take out consumer credit, insurance is optional and the obligation to fill out a health questionnaire only applies when taking out death and disability insurance. The repayment monthly payments are low, therefore with a less impact on the purchasing power. Finally, seniors with assets can guarantee their loan on it.

Good to know : the personal loan is not affected unlike for example a car loan. It requires no proof, the use of the borrowed amount being left free.

The repurchase of credit for retirees: finding room for maneuver

The repurchase of credit for retirees: finding room for maneuver

The credit consolidation solution is a remedy for retirees who wish to finance a new project while they continue to repay one or more other credits. The process is simply to combine several bank loans to make one. The idea is to clarify the situation on current loans but above all to negotiate with the lending institution more favorable conditions at the same time as the transition to retirement is synonymous with loss of income.

For a retiree, combining his credits allows you to review the repayment period as well as the level of monthly payments. The objective is to extend the term of the loan to take advantage of a drop in the amount of the single monthly payment, while financing a new project. Its expenses of repayment of the credits reduced, the senior is able to compensate for the fall in his income.

The loan repurchase can group the current real estate loans or the consumer loans. Certain lending organizations precisely formulate senior loans (or for early retirees). These contracts may propose repayment periods for the repurchase of credits of up to 85 or even 95 years. Everything then depends on the repayment capacity and the debt capacity of the retiree.

If the banks can request the subscription of a death-disability insurance beyond a certain age to cover themselves, the senior has the right to refuse including if it presents an aggravated health risk as framed the convention AREAS (Insuring and borrowing with a health risk). However, the retired borrower will have to post serious guarantees in the event of impossibility of meeting its maturities by means of its inheritance or its savings (life insurance contract for example).

Mortgage for retirees: anticipate retirement

Mortgage for retirees: anticipate retirement

In theory, there is no age limit for taking out a mortgage. However, many people borrow some time before retiring. The over 50s were thus only 11% in 2013 to validate this choice, a figure which now climbs to 17%. But the transition to retirement acts as a switch since only 4% of seniors over 60 have taken out a mortgage.

It is obvious that senior citizens represent a higher risk for lending organizations, which rely on people who can repay the loan. Banks therefore play the security and the ability of the retiree to repay his loan, rather than the nature of the real estate project. As a result, the bank does indeed take a kind look at customers who are retiring. They generally have stable assets and income, and no longer have dependent children.

The lender even anticipates the decline in retirement income, either by taking into account only 70% of income when assessing the debt capacity and quantifying its offer, or by reducing the amount of monthly payments. repayment in time. Example: monthly payments can be reduced from 30% to 90% at the time of the subscriber’s retirement in order to take into account the loss of income.

Mortgage without contribution for senior: is it possible?

Mortgage without contribution for senior: is it possible?

Obtaining a mortgage without contribution is an option open to retirees. Indeed, certain life events (personal project, help for children or grandchildren, etc.) can lead to depriving oneself of its contribution.

However, it is still possible to obtain a mortgage without contribution for seniors although this approach is more complex. To optimize your file, you must strictly comply with bank debt standards and the age at which credit ends. Soliciting several financial institutions is also essential.

Senior real estate loan: managing death and disability insurance well

Senior real estate loan: managing death and disability insurance well

When the contribution or income is significant, a retiree can perfectly consider making a mortgage at the age of 60 or even 70 years. However, the lending institution imposes more stringent conditions and sets a high cost for death and disability insurance. Advancing age is correlated with the appearance of pathologies or the accumulation of medical history. The bank protects itself by increasing the rates on the borrower insurance which takes over in the event of the death of the subscriber.

Taking out a mortgage up to age 65 is no problem. Lending institutions formulate negotiated group insurance offers which allow them to pool risks between members. On the other hand, from 65 years of age, death-disability insurance is a concern, its coverage not extending beyond 75 or 80 years. Thus, making a mortgage at 65 years over a period of 15 years becomes complicated. Using insurance delegation allows retirees to take out a specific senior contract with coverage up to 80 years or even 90 years.

Please note, the cost of borrower insurance can cause the rate of wear to exceed, which means that the client cannot be financed, especially in the event of illness which causes a significant increase in the premium. Financing without insurance then appears to be the solution. The retiree can guarantee his loan by a third party who will act as a surety or by pledging the loan on a life insurance contract or on a stock market portfolio.

In the event of death, the bank becomes the beneficiary, the latter may also take out a mortgage on the property owned by the deceased retiree. It can also insure only the younger or healthy spouse.

Auto credit for retirees: under what conditions?

Obtaining a car loan when you are retired requires following granting conditions similar to those of a personal loan or a mortgage. Thus, it is essential to minimize the duration of borrowing while respecting a debt ratio of 33% maximum.

Good to know: some banking establishments accept to lend without insurance in return for the pledge of an investment or the taking of a pledge on the vehicle.

What are the credit organizations for retirees?

Seniors can refer to all traditional financial institutions such as banks and bancassurance. It is also possible to request the services of a specialized broker in order to simplify the process undertaken and obtain the best rate conditions.