Loan buyback or loan consolidation works in stages, especially to get the best deal, just like the best rate. Depending on the personal and financial situation of the borrower, the offers will be able to differentiate, the objective being to put in competition the different actors of the market, that they are banks or organizations specialized in repurchase of loans. The deadlines, that is to say, the period of reflection, the period of study of the file and the delay of retraction are nonetheless unavoidable, as much to respect the legal constraints as to validate the offer of redemption of credits.
The steps necessary for the procedure
As part of a renegotiation operation of its credits in progress, each file is unique, which is why it requires a personalized study and of course the most serious. Institutions and banking intermediaries must fully validate the financing file, following a multi-step procedure. The borrower must be as responsive as possible, responding as soon as possible to requests for written or verbal explanation and additional supporting documents to validate his file.
It should be noted that before applying for the purchase of credits, the eligibility of the borrower must be verified, namely that the borrower must reside in France and not be registered in the Central Check File (FCC).. These are two mandatory conditions for the loan consolidation to be authorized.
At first the borrower makes a request, which must then lead to an agreement. When the file arrives in the hands of the lending institution, it will have it analyzed by expert analysts, a kind of internal commitment committee. Only after consultation will the agreement be given or not. The first deadline to be respected here is that of instruction which is of an average of ten days, if all the parts of the file are met. Note that for a mortgage purchase, this period may be longer. In this case, the bank or the lending institution must verify or even appraise the value of the property.
The second step is that once the file is accepted, the lender will offer a loan offer to make the redemption of credits. At this stage, the borrower is not engaged in anything and he has a period of ten days to accept this offer. The last step is to sign the offer, which becomes effective.
The deadlines in stages
Since the redemption of credits is a banking transaction that is not to be taken lightly, financial institutions need time to assess the risks of an application. It is quite possible to present your file to several banks and organizations at the same time, it will just wait for their response. Needless to say, if a document is missing, the waiting time will be longer. Only after consultation of the file by the internal commitment committee at the bank or the lending institution will the agreement be announced. It depends on the conformity of the offer with the conditions of the organization to be approved. The instruction period that is mandatory is ten days on average.
It will of course be necessary beforehand to have prepared the borrower file. Its development will depend on each one, but the more quickly the pieces will be reunited, the more quickly the file will be transmitted to the lending institution.
Once the file is accepted, it means that the lending institution agrees to take over the redemption of credits. A new loan agreement will then be offered to the borrower for a final signature. Again there is a delay, and it is ten days. These represent the period of reflection, during which the borrower will be able to think about his project and decide to make it happen, but above all he will be able to check if the offer meets his expectations and his needs. Until then he is still not engaged.
Its commitment begins at the signing of the proposed credit agreement, but again the Lagarde law of May 2011 imposes a mandatory withdrawal period of fourteen days for a purchase of consumer credit and ten days for a repurchase of mortgage. For this case, it is the notary who will be in charge of the management of the creditors, it is he who will organize the settlement of the outstanding capital.
The lender only has to release the funds to pay the remaining monthly payments of the various credits bought back. In general, this step is done in a very fast time, as soon as the contract of repurchase is definitively accepted.
Elements lengthening the credit surrender period
The first thing that slows down a request to buy back credits is negligence in mounting the file. We must pay attention to every detail and be very vigilant. A well organized and complete file will allow a quicker response, while a file where there are missing parts will be slowed down by an additional delay. To shorten the waiting time, it is necessary to quickly execute the operations so that the lender organization which is sometimes an intermediary can transmit the omissions.
In the case of a housing loan consolidation, an expert will be in charge of making an estimate of the property. This procedure may take a little time, but it will have no impact on the initial redemption offer.
When the offer to buy credits includes the provision of additional cash, the funds will be released according to a specific deadline. If no bond or mortgage is right next to the loan agreement (this is usually the case when there is no mortgage), the funds will be made available on the 14th day after acceptance of the offer. This period corresponds to the legal withdrawal period during which the borrower can still change his mind and cancel the project. In some cases it is possible to make the funds available from the 8th day, there will be a specific request of the borrower.
When there is a guarantee associated with an offer to buy back credits, usually a mortgage, it is only when the signature has been made at the notary that the funds will be available.
In summary, it takes approximately ten days to three weeks to finalize a buy-back of consumer credit, with a possible cash demand, and four weeks for a loan consolidation with a bond or a mortgage.
It’s still time to renegotiate
The time is still at low rates. This means that it is always wise to embark on a mortgage repurchase. Since 2017, many households have taken the plunge. The beginning of the year 2018 saw the same trend, households wishing to take advantage of rates maintained at a relatively low level. For the operation to be worthwhile, the gap between the old rate and the new rate must be at least 0.70% over the same period. The second condition is that you still have to be positioned in the first half of the initial credit repayment. To amortize the redemption fee, you must have already paid at least one year of credit. Finally, for a good profitability of the operation, the remaining capital must be at least equivalent to 70,000 euros.