The purpose of the credit repurchase is to consolidate all the outstanding borrowings to subscribe to only one. This operation makes it possible to renegotiate the borrowing rate downwards and to have only one repayment deadline. In return, the repayment period is extended. These are the same reasons that can cause borrowers to make a second loan repurchase.
What are the conditions? What are the advantages of repeating the operation and how does a second loan buy-back work? Let’s come back together on this opportunity which allows you to rebalance your financial situation and free up cash to make new personal projects a reality.
What is a second credit buy-back?
A second repurchase of credit consists in wanting to make a second grouping of loans after having already carried out a first one. As a reminder, a credit consolidation allows you to redeem all of the credits taken out to present only one. In other words: the borrower pays only one monthly loan term, the amount of which is determined by the initialed credit buyback contract.
The interest of a second repurchase of credit is identical to the first: to combine all its loans in only one spread out in time. Objectives: lighten the monthly repayment and take advantage of a more favorable credit rate. The subscriber thus relieves his financial situation just as much as he clarifies it. Indeed, it no longer applies to only one lender in the context of a single loan.
The borrower finds a balanced budget more suited to his personal, professional and financial situation. It also benefits from new room for maneuver in terms of cash flow to finance a project such as a trip abroad, the purchase of a vehicle, work in accommodation, the anticipation of funeral expenses, etc. As long as the situation is tenable, anyone can request a second loan repurchase because, theoretically, the number of credit groupings is unlimited.
How much time should be respected between two credit buy-backs?
However, requesting a loan repurchase for the second time involves respecting certain constraints. The first of these concerns the period between the first credit consolidation and the second. You must wait at least one year between the two requests with the exception of two scenarios:
- This period of time between two repurchases of credits does not have to be if the subscriber uses this new grouping of loans to finance a new project. This is, for example, the case of a future retiree who decides to take out a loan to start unexpected renovation work on his home. Although he has already made a first loan repurchase, he repeats the operation by combining the single loan with the new loan required to carry out his work.
- The delay condition for the second credit repurchase is also removed when the amount of the second credit repurchase is higher than the first. This gap, however, must register within reasonable proportions: 20% of new credit over the amount of 1 grouping of loans made.
In which cases can we take out a second loan buy-back?
The purpose of the second credit repurchase is to reduce the monthly repayment. If an individual or a household believes that their financial situation is tending to become unbalanced, they can request a new loan restructuring by buying back their first loan repurchase.
Without being exhaustive, several situations may lead to considering this solution again:
- to take advantage of a low interest rate environment in order to reduce its monthly charges and thus reduce its debt;
- to make a partial early repayment of the previous loan repurchase following the reconstitution of savings resulting from the first refinancing of old credits;
- to lower the level of debt when buying real estate;
- to cope with new or unexpected expenses;
- to finance a new project without increasing the debt ratio;
- to avoid having to use revolving credit when you lose your job, retire or separate.
How does a second credit buy-back work?
In addition to thinking about respecting the time limit condition on the second loan repurchase, the first step consists in starting a renegotiation of credit with the lending institutions. The purpose of the discussions is to prevent prepayment penalties from affecting the consolidation of credits in progress. It is possible to go through an intermediary who will defend the request with banking establishments in complete neutrality.
Everything then depends on traditional criteria:
- updated study of the borrower’s profile (personal, professional and property situations);
- repayment capacity;
- bearable debt ratio.
A feasibility file is sent to the lender. After passing before an internal commitment committee, the second credit buyback file receives a favorable opinion or is refused. The instruction period is spread over ten days.
Good to know : banks are more receptive to a second repurchase loan when the person is faced with the consequences of a life accident.
Compared to conventional documents, the lender can claim a guarantee per payday session or the subscription of a mortgage loan. This is intended in particular for owners and applicants in the process of home ownership, when the amount to be purchased exceeds the threshold of $ 200,000. A tenant can also use it if he can guarantee his loan with real estate.
In the event of a favorable outcome, the bank transmits a credit repurchase offer, the subscriber legally having a 10-day cooling-off period if he wants to buy back mortgage loans. The signing of the contract confirms the offer of second loan repurchase, knowing that a withdrawal period exists for 14 days for consumers of consumer credit, two weeks during which the funds are frozen.