February 2, 2020

About the smoothing of mortgage loans

To finance your property purchase, it is often necessary to call on several loans. The smoothing of loans consists in adjusting the repayment terms of each of these credits so that your monthly payments are fixed and adapted to your budget, particularly at the start of your repayment.

 

Combine with different home loans

Combine with different home loans

When you buy your house or apartment, you often use several different mortgage loans. Loan at zero rate +, subsidized loans, ELP loan,… your classic mortgage comes to supplement everything that could not have been financed otherwise. Naturally, when you combine two or three or more home loans, you take out different loan terms and conditions and your monthly repayment payments also accumulate. Loan smoothing solves this problem. By smoothing your classic mortgage, your bank will give you fixed monthly payments. In practice, this operation is carried out almost systematically and the loan smoothing is set up for all borrowers who add several mortgage loans to finance their acquisition.

The cost of credit and the amount of monthly payments

The&nbsp;cost of <a href=credit and the amount of monthly payments” />

By smoothing your mortgage, you will reimburse a little less the first years, the time that the other loans are reimbursed (PTZ +, PEL, 1% Housing, etc.). On the other hand, it will cost you a little more because you will then pay back less quickly the capital borrowed thanks to your conventional loan. The big advantage is that you will be able to control your budget for the first few years and you will not have to deal with excessively large monthly payments. In fact, subsidized loans, such as the PTZ Plus or the PEL, are generally credits granted for short periods.

They are therefore accompanied by fairly large monthly repayments in the first years. Consequently, it would be difficult to add to the monthly payments of these assisted loans, the monthly payments of your additional mortgage, (This generally representing the largest part of the sums borrowed). Thanks to the smoothing of your loan, you can thus adjust your monthly repayment according to your income. However, the smoothing will be accompanied by an extension of the duration of your loan, since the monthly payments are then spread over time. It is therefore a question of finding the best possible balance between the increase in duration due to smoothing and the amount of your monthly payments.

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