The choice of the repayment term in the context of a repurchase of credit is important, a duration of 120 months, or 10 years can be a good solution between moderate interests and adjusted monthly payments.
Choose the duration of a credit surrender
The repurchase of credit is a transaction whereby a bank offers a borrower to buy back one or more credits, there may be the repurchase of mortgage and the purchase of consumer credit. The interest of the transaction is to readjust the repayment conditions when repurchasing outstanding loans, proposing a new repayment term, a single rate and a suitable monthly payment. The choice of the duration is important, it will make it possible to condition the amount of the monthly payment but also the interests which will have to be refunded.
The shorter the duration, the lower the interest and the higher the monthly payment. Simply, the debt limit remains the main determinant in a mortgage buyback, a 10-year period is a relatively short period to repay the amounts due, which means that interest will be rather low. The choice of duration must be based on the ability to repay but also the willingness or not to pay off the loan quickly.
Repurchase of credit over 10 years: the right duration?
The right duration is the one that allows the borrower to repay his debts in the best possible conditions. When the operation aims to consolidate several credits, the objective is to reduce the monthly payment, which implies extending the repayment period. In this case, opt for a period of 10 years is possible for small amounts of credits to buy back. This term will be more suitable as part of a home loan buyback, where the borrower seeks to negotiate a better rate and a shorter term.
Repaying a loan over 120 months (10 years) is the guarantee to benefit from the best rates on the market, so this is the ideal duration to minimize the amount of interest to be repaid, it is also a period that will be synonymous with monthly payments households with the capacity to repay a high monthly payment will be able to take advantage of this period to settle their debts quickly. Note that the addition of an additional amount to finance a project such as works may affect the repayment period.
Get duration estimates
The repayment term is not easy to determine at first sight, which is why the banks recommend to establish a credit buyback request to validate the different durations and rates that can be considered. This simulation, which is done online, makes it possible to quickly obtain a first estimate of financing with the ideal duration taking into account the situation of the borrower, whether over 10 years, 12 years or 15 years. Note that this estimated approach is provided free online, via simulation services and comparators.