21.04.2017

REAL ESTATE : These unknown bank loans which make easier the purchase-resale

In order to attract a Secundo-acceding customer a few bank have recently put forwards credit formulas helping to make the joint between two housing without being locked into big monthly payments.

This system is still largely unnoticed. For several months, a handful of banking institutions - Crédit agricole, Crédit du nord, BNP Paribas, few popular banks - have been pushing new loans that may offer a help to the owners who want to buy a new home whereas they have not yet sold their home. The advantage: they significantly reduce indebtedness compared to a traditional bridge loan.

In concrete terms, these bank offers - called "buy-sell" or "relay-redemption" depending on the case - consist of buying back your outstanding credit from your establishment. Then, offer you a new global loan comprises at the same time the remaining capital due of the former loan (which has been repurchase) and the necessary funding for the new property coveted. Thanks to this system, the “relay” - advance that the bank gave you while waiting the sale of your former housing - is directly attributed to this new line of credit, more often representing 70 % of the amount from the estimated value of the property to sale. 

To well understand this complex system, we realized a simulation with the help of the broker Vousfinancer.com, as example, a couple owning a property estimated at 170.000 €, with a remaining due of 85.000 € and pays each months 630 € of credit.  This household would like a property of which the price is 270.000 € (notary and guarantee costs included). And they gain 3.800 € per months and have a financial contribution of 10.000€.

The purchase/resale operation will work this way:

  • The bank will first calculate the relay amount to which our couple are entitled by taking 70% of the property value. 170.000 € x 0.70 = 119.000 € (amount which is completely reimburse with a single payment upon the sale of the property).

  • The amount of the new loan is then calculated this way : 270.000 € (funding for the new coveted property) + 85.000 € (remaining due of the former credit) + 1.700 € (reimbursement charge of the former credit) - 10.000 € (financial contribution) - 119.000 € (amount of the bridge loan) = 227.700 €.


For 227.000 € on a 20 year mortgage at the rate of 2.90%, our couple will have to reimburse 1.251,4 € per months. A debt of 32.9 which allow him to get his loan and acquire a new housing (as a reminder banks don't lend above 33% of indebtedness).

This would not have been possible if the couple had opted for a traditional bridge loan from his own bank, because the debt would then have flirted with the 50%!

We remind you that in the context of a traditional bridge loan, the advance (relay) that your bank established is less advantageous since it subtracts the remaining capital due from the value of the property. 

  • The calculating of the classic relay work this way : (value of the property x 70%) – remaining capital due. In our example 170.000 € x 70% - 85.000 € = 34.000 € (against 119.000 € previously)

  • To finance their property, our couple then, obtained a new loan of 226.000 €. 270.000 € (value of the coveted property) - 34.000€ (bridge loan) - 10.000€ (financial contribution)

 

By repaying this loan of 226.000 € on a 20 year mortgage at the rate of 2,90%, he will have to pay 1.242 € per months. But the 630€ of installments monthly of its current credit (which runs as long as the old property is not sold) are added. That is a sum of 1.872 € to be repaid each month which makes the rate of indebtedness unbearable (49%). This is all the more severe as the couple will still have the relay and the interest of the relay to be repaid at the time of the sale of the old property (here we have taken the example of a deferred total payment). 

It is understood: the purchase-resale offer can help to join between two housing by avoiding paying too much every month. These operations can be all the more interesting than to redeem your credit. You will have the possibility to renegotiate the accidental death and disability coverage related to their loan, as the new law Hamon permits it.

Nevertheless: it is not a silver bullet… “Banks select above all files with good-quality housing and well positioned, which can sell fairly easily, in order to pay down the bridge loan as quickly as possible”, noted Sandrine Allonier, spokeswoman of the broker Voufinancer.com.

In general, establishments allow a year to their clients to sell their property ; delay which can be extended to one year on a case-by-case. If the property is sold on time, there is no problem: the borrower will mostly generate cash that can be reinjected into the loan, in a bit to lower his monthly payment. In our example, if our couple manages to resell its housing at 155.000 € after 12 months, it could reimburse its 119.000 € relay.  Then they will have 32.549 € (net of interest due on the bridge loans) to reimburse their loan without paying penalties. 

In contrast, more time it will take you to sell your property, more expensive will be the operation.  Much more with the traditional bridge loan. In both case, you reimburse the relay and the interests thereto related at the moment of the sale of your former property : but the advance granted by the bank is always greater in the context of a purchase-resale transaction (€ 119,000 against € 34,000 in our example), the interest to be repaid will necessarily be higher.



Source : 
capital.fr

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