When one subscribes a mortgage, it corresponds to his personal and professional situation at a specific moment. But what about a few years later, when income goes up and the family gets bigger? Renegotiating your rate – if it has fallen – is one thing, but you can also become a real player in your loan by adjusting its maturities. An interesting calculation that we do not think often enough.
If you have taken out a mortgage for 20 years, for example, you have certainly calculated exactly what you could repay each month without depriving you of everything. But 5 years later, probably have you been increased or have you had a promotion. You may be in a relationship when you were not. In short, your situation has changed, just like your income. And the conditions of this loan may not correspond to your new means.
Anyway, you can adjust the deadlines, by paying – a little – more each month, which will shorten the duration of the loan and you will make significant savings.
An example of a flexible loan:
Take a loan of € 180,000 over 20 years, subscribed in 2017 at a rate of 1.50%. Or initial monthly payments of 869 €.
For example, by increasing the amount of refunds by € 100 per month, ie a new monthly payment of € 969, the duration of the loan decreases by 25 months. And so goes from 20 years to 17 years and 11 months! Not only will the property be refunded faster, but you will have saved € 2,807 on the total cost of your credit.
Get advice and support
Most banks today provide this option of modulation of the mortgage, which is a priori free and carries no form of penalty. If the increase you ask for your monthly payments is modest (less than 10%) and is actually related to an increase in your income, this modulation should be granted to you without delay. On the other hand, if the bank feels that your repayments will become high relative to your situation, it may decide to re-evaluate your borrowing capacity. And eventually you refuse this modulation.
A real estate broker can advise you and accompany you at all stages, including when you subscribe to your loan, to ensure that a maturity modulation option is well planned.