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Lower mortgage loan rates: how to take advantage?


 

Mortgage loan rates are at the lowest level ever recorded: Summer is off to a bright start

Since January, we are witnessing successive decreases in the rate of mortgage rates of our banking partners. For example, the best non-insurance rate over 20 years decreased by 0.65% to 1.25% in June against 1.91% in January. To know the rates in force in your area, do not hesitate to consult our barometer of mortgage rates.

How does a homeowning household benefit from these rate cuts?

money rates

The impact of the rate cut is perceptible in a number of ways, each with a purpose.

Decrease the amount of the monthly payment & reduce the cost of credit

Decrease the amount of the monthly payment & reduce the cost of credit

  January 2016 June 2016
Requested credit 150 000 €
duration 240 months (20 years)
Rate (excluding insurance) 1.91% 1.25%
Monthly 752.5 € 706.7 €
Total cost $ 30,587.5 $ 19,608

For a loan requested of € 150,000 over a 20-year loan term, the borrower has a maturity of more than € 45 per month due to the rate cuts since January. The second advantage, the total cost of credit is reduced by more than 35%.

Increase the borrowing power with the same monthly payment

  January 2016 June 2016
Requested credit 150 000 € € 159,710
duration 240 months (20 years)
Rate (excluding insurance) 1.91% 1.25%
Monthly 752.5 €
Total cost $ 30,587.5 $ 20,877.5

For the same maturity of € 752.5 over 20 years, the first-time buyer can borrow almost € 10,000 more than in January, while having a total cost of credit reduced by 30%.

This solution can help it:

  • Either to realize his project, if it exceeded his capacity of financing
  • Either to buy bigger and maybe buy a home with the room that was missing

Decrease borrowing time to minimize the cost of credit

Decrease borrowing time to minimize the cost of credit

  January 2016 June 2016
Requested credit 150 000 €
duration 240 months (20 years) 224 months (18 years and 8 months)
Rate (excluding insurance) 1.91% 1.25%
Monthly 752.5 € 751.2 €
Total cost $ 30,587.5 18 257.7 €€

For a requested credit of € 150,000 and an approximately equal monthly payment, the lowering of the rates between January and June makes it possible to vary the duration of the loan in favor of the borrower. In our example, he earns one year and four months. As a result, the total cost of credit is reduced to the maximum (more than 40% decrease in this example)

These declines in mortgage rates may well help buyers to realize their project!

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