Is saving important when buying a loan?

Despite an often uncertain socio-economic context (reform, elections, economic crisis, etc.), the French continue to save. However, is savings an asset in the context of a loan consolidation? Here are some answers.

By definition, the repurchase of credit is a banking operation making it possible to repay in advance the capital remaining due of its credit (real estate and / or consumption) in order to replace it by a new loan with reduced monthly payment and adapted to its finances and its projects.

Enabling the borrower’s finances to be reorganized efficiently and sustainably, the repurchase of credit, which concerns all borrower profiles and all socio-professional categories, and savings can have several common objectives, namely: anticipating the unexpected, achieving one or more projects without increasing its debt ratio or improving its borrowing capacity. In addition, unlike a mortgage application, savings cannot be used when buying back credit.

 

Is savings an asset when buying back credit?

Is savings an asset when buying back credit?

A borrower with one or more savings is considered someone serious in the eyes of the banks during a credit consolidation. He will always be in a better position to negotiate the best financing offers in force.

However, if having the agent aside can be a pledge of confidence during a credit buy-back, you should know that having one or more savings is not always synonymous with obtaining a credit buy-back. .

Namely, the financing of a grouping of credits is subject to several criteria, namely: a stable professional situation, a reasonable debt ratio (less than 33% of net income), absence of filing (FICP, FCC). The applicant for a credit buyout must also have a healthy banking behavior during the months preceding his request.

 

Saving credit for savers: deleveraging or saving?

Saving credit for savers: deleveraging or saving?

Borrowers with one or more savings must ask themselves several questions before making a credit union. The first reflex is to compare the interest rate proposed for the repurchase of credit and the remuneration of savings.

However, if the level of the interest rate is significantly lower than the interest rate on savings, it is recommended to invest your money and make a loan repurchase. On the other hand, this banking operation is not financially attractive if the rate proposed for the operation is very high. To know that the repurchase of credit can have, all the same, other motivations that the obtaining of better conditions of financing compared to its initial conditions of credits.

In addition, to assess the need to buy back credit when you have one or more savings, it is recommended to seek the services of a bank intermediary specializing in the subject. The free, no-commitment simulation of credit consolidation offered by this professional makes it possible to assess the interest of such an operation or even to preview the state of its finances after a consolidation of loans (real estate, consumption)

Finance furniture purchase cheaply and conveniently with a loan.

 

According to a recent survey by Spin Lender financial market research, many Germans plan to buy new furniture, electrical appliances or larger household appliances this year – in principle this is not a surprising study result. In comparison to the previous year, however, the Germans tend to finance this purchase much more by means of a bank loan.

Who currently lacks the necessary money to buy furniture or larger household appliances opens up three options for action: The consumer can either start saving the amount of money required, pay via the overdraft facility of the checking account or bridge the financial bottleneck with the installment loan from a bank.

Avoid financing the purchase of furniture with overdrafts

Avoid financing the purchase of furniture with overdrafts

Since interest rates for savings, such as overnight or fixed-term deposit accounts, are currently at an all-time low and often do not even compensate for inflation, it would take a long time to save the amount of money needed – reacting to current special offers from furniture retailers is also an option not possible.

Consumers should continue to avoid urgently financing the purchase with the expensive overdraft facility – especially if the overdraft amount cannot be offset in the very near future. Banks charge very high interest rates for overdrafting the current account – as a rule, the fee is a multiple of normal loan interest. Since no repayment plan is agreed with the bank when using the overdraft facility, there is a very high likelihood that the consumer will use the overdraft facility longer than is actually necessary – this also increases the interest payments due.

Pay for furniture purchase cheaply with a small loan

Pay for furniture purchase cheaply with a small loan

To finance a furniture purchase through a bank loan, it is usually worthwhile for consumers to take out a so-called small loan. Essentially, these loans differ only in a lower loan amount of a maximum of 5,000 USD and the resulting shorter term.

Such a small loan of USD 1,000 with a term of 12 months can currently be taken out by consumers via an independent comparison portal on the Internet from an effective annual interest rate of 2.74 percent: Each month, the furniture buyer then only pays the bank just under USD 85 back, altogether interest costs of only 15 USD are due for this loan. For a long time now, you can no longer take out a cheaper loan to buy furniture from a bank – so what are you waiting for? Treat your apartment to a new coat of paint this spring with new furnishings for your own four walls.

Credit conversion – is it worth and how to convert?

Mortgage conversion is a way to more favorable loan repayment terms. However, it is not always profitable. Procedures may be subject to high commissions and additional fees. Is it worth making a conversion then? How and when is the best time to decide on it? We answer!

Foreign currency loans

Foreign currency loans

Foreign currency loan is a loan that is granted in a currency other than the currency in force in a given country. It is also called a foreign currency loan. In Poland, this loan is most often offered in euros or in Swiss francs.

Until recently, a loan in a foreign currency could have been taken out by anyone who showed adequate creditworthiness. Today, however, it can be used by people who earn income in the currency in which they want to make a commitment.

What is currency risk?

Currency risk is the possibility of incurring losses as a result of changes in exchange rates. Fluctuations in these rates can lead to better but also worsening of your financial situation.

However, you can never accurately predict the direction and scale of changes in exchange rates. Therefore, when investing or incurring liabilities in a currency other than the one in which you earn, you are always burdened with such a risk.

Mortgage conversion in 2020 – what is it about?

Mortgage conversion in 2020 - what is it about?

Currency conversion of a loan is one of the ways to restructure, i.e. to change the method of settling the financial liability. With it, you can set new, more favorable loan repayment terms.

It involves changing the currency in which the loan is repaid. This solution is dedicated mainly to people who made a commitment to the strengthening currency. Along with the strengthening of the currency, interest rates increase, and hence the interest rate on the loan.

The more the currency is strengthened, the higher the loan costs are. So if you have a foreign currency mortgage, you will have to bear the costs associated with global economic changes that are complete without your influence.

What regulations govern the procedure for converting a loan?

There are currently no separate provisions regarding the conversion of the loan. The provisions of the Banking Act and general legal provisions apply. Due to the problem of people who took out loans in francs, work is still underway on changes in the currency conversion law.

When is it worth converting the mortgage?

When is it worth converting the mortgage?

Currency conversion results in the fact that after its introduction, further installment repayments will take place in dollars. This means that the installment amount is certain and the currency risk is leveled out. However, this solution does not always pay off. It is favorable when the loan currency rate stays low and the dollar is strong.

In addition, analysts predict that the currency in which you took out the loan will strengthen. Currency conversion can also be beneficial if the currency in which you earn has changed.

What are the benefits of loan conversion?

The greatest benefit of currency conversion is the certainty about the amount of loan installments. However, this solution also has many disadvantages that you should keep in mind before making hasty decisions.

What are the pros and cons of converting your mortgage?

Before you start thinking about changing the currency in which you repay the loan, check what currency conversion involves. The pros and cons of such a decision are not always balanced.

Disadvantages

  • the need to pay a commission for currency conversion
  • the threat of higher loan margin
  • risk of less favorable interest rate
  • the need to pay additional currency exchange costs

Benefits

  • paying off the rest of the loan in USD
  • a chance to lower the loan margin
  • a chance to take advantage of more favorable interest rates
  • the certainty of a fixed installment payment

Rules for converting the mortgage

bank

The procedure for converting your mortgage is subject to certain rules. The legal regulations that banks are subject to impose restrictions on those who want to convert a loan. What rules apply in this regard?

Who can convert the loan?

According to the “S” recommendation issued by the Polish Financial Supervision Authority, loans in foreign currency may be granted only to persons who document that they collect income in it.

This means that people who earn only in USD cannot apply for a foreign currency loan. They also cannot apply for the conversion of a loan already granted in USD.

Important!

To apply for a loan conversion, you must prove that you earn in a particular currency. The bank usually requires appropriate certificates translated into Polish.

How long does it take to convert the loan?

It is difficult to say unequivocally how long it will take to convert the loan. The application is not complicated, but in many cases, the bank is testing the applicant’s creditworthiness again.

The waiting time for a decision may, therefore, resemble applying for a grant.

How much does it cost to convert a mortgage?

Banks charge considerable fees for the currency conversion of a loan. They usually add a commission for currency conversion in the amount of 0.5 to 1.5 percent of the debt balance. It is added monthly to the loan repayment installment.

In addition, they also charge a fee for drawing up an annex to the contract, specifying the terms of currency conversion. Normally it is from 100 to 350 USD. An additional cost is also the so-called currency spread, which is the difference between the rate of payment and repayment of the loan. How much the currency conversion of the loan costs depends ultimately on the individual offer of the bank.