Today, this practice is common in the United States but it is not yet in France. Too bad, because the transferability of the loan has many advantages, especially in the case of a rise in rates.
Carrying out the transferability of the loan is advantageous if current rates are low
What is it exactly?
You decide to sell your home to buy a new one, before the end of your current loan repayment. Generally, the owners decide to settle their loan in order to take out a new loan. But there is a much more effective approach, allowing you to save money: the transferability of the loan. This allows you to keep the conditions of your first loan.
Lite Lender, mortgage loan expert, describes below the advantages of the transferability of the loan and the elements that you must take into account.
The advantages that the loan transferability gives you
Since the transferability of the loan is not yet well known to borrowers, it usually happens: the owner wants to sell his property to buy a new one. He then decides to settle his current loan and take out a new loan at a different rate from that obtained several years ago.
However, it is important to compare the conditions of your initial loan with the current conditions, to ensure that the portability of the loan is indeed advantageous. If rates are much lower today than they were years ago, then it will certainly be more attractive to settle the original loan and apply for a new loan based on current market rates.
To do this, make sure to take into account all the elements in your calculation: the rate differences but also the potential prepayment costs or even additional costs generated by the mortgage that your bank may claim from you balance of your original loan.
Calculate, compare and make the best choice!
TO REMEMBER !
- Ask your broker to negotiate this clause in your loan contract
- If the current rates are low, do not hesitate to activate this clause
- This will make you decrease your monthly payments