Created to facilitate homeownership, the zero-rate loan is a credit established by the state in collaboration with most banks, to enjoy a rate of 0%. Often, it will complete a conventional mortgage that is subject to an interest rate to obtain the amount necessary for a real estate purchase. Even if the terms of the 0% interest rate change for the coming year, many French people have adopted this method of financing. But what happens when one wishes to proceed with a real estate loan buyback to reduce the amount of maturities with a better rate of the home loan without losing the benefits of the loan at zero rate? How to carry out a really interesting credit redemption operation? Several options are possible …
Group your credits by excluding the PTZ
To fully reap the benefits of a credit buy-back by retaining the benefits of the zero-rate loan, the ideal solution would seem to be to redeem all of its outstanding credits except the PTZ. Unfortunately, the reality is not so simple. Indeed, the institution from which you have contracted your mortgage and your PTZ will certainly refuse to keep only 0% credit. As can be understood, this type of loan is not subject to an interest rate, so the bank has no interest in keeping a loan that pays nothing. However, in theory and according to legal texts, all loans must be repurchased “except express request of the borrower”.
In practice, the reality is quite different. For starters, many will be satisfied with the refusal of the bank and will not seek to know if their request is legitimized by the law. Indeed, the prospect of a legal battle will cool most pretenders. To be perfectly clear, it is the lending agency that will decide on the proper development of this idea and it is the body in charge of the purchase that will eventually defend your case. Simply put, grouping your credits while letting your zero rate loan take its course is possible but not easy to obtain.
Group your credits by adding the zero rate loan
Simpler and therefore faster (which can be an important point if we can no longer deal with its monthly payments), we can integrate the loan at zero rate in the purchase of credit. In this case, we would lose the benefits of PTZ. However, depending on the amount of the remaining amount to be refunded, you can totally navigate it. It is the organization that will take care of the purchase that can inform you about the relevance of such an operation and the benefits that can be derived. Be that as it may, by grouping all credits including the loan at 0%, the monthly payments will inevitably be reduced since the credit will be renegotiated in time and the rate of other loans will be reduced. The relevance of such an operation will really depend on each case and the amount of prepayment penalties caused by the repurchase of loans.
When the mortgage comes into play
When a Mortgage Mortgage Loan has been purchased, the conditions for redeeming the Zero Rate Loan may vary. If the mortgage is made for the “classic” mortgage and the 0% credit, it will be necessary to make a repurchase of global credit including the PTZ and then proceed to a new mortgage. If the zero interest loan is not affected by the mortgage, the first solution can be considered without problem.
Maintaining the benefits of the Zero Rate Loan remains the most attractive solution. Nevertheless, if you face repayment difficulties and that is why you are thinking about redemption, keep in mind that two monthly payments will have to be paid simultaneously: that of the PTZ, and that of the new credit contracted by the repurchase . The choice of the ideal approach will be done on a case-by-case basis, so do not hesitate to survey the credit redemption organizations to know their opinion and find out what benefits they can get you.