A loan buyback can consolidate different loans into a single monthly payment to reduce the cost of future payments, this financial operation is proven and effective to simplify a budget and make new investments.
The Zero Rate Loan is a help that is associated with a mortgage, this aid is also proven and offers several benefits to people wishing to borrow.
The interest is then to know if the PTZ is eligible for a repurchase of credit, if so, which are the modalities to be respected and can one then speak of a ” Purchase of Credit Zero Rate “?
Credit Redemption and Zero Rate Loan
What is a zero rate loan?
The Zero Rate Loan, more commonly known as PTZ, or PTZ +, is a loan supplement to a mortgage. Depending on certain conditions, this assistance targets individuals wishing to buy a home that becomes their main residence. This assistance for first-time buyers is a real advantage for borrowers who want to become owners of a principal residence because their financial arrangement is then optimized before signing.
A credit buyback at 0% interest rate never existed
Banks do not have an interest in granting a borrower a 0% interest rate for a loan buyback. Initially, the very principle of credit redemption is to allow borrowers a repayment facility through an interest rate lower than the initial rate, which is why it is obviously impossible to find credit at a lower interest rate and interesting that 0%.
When the repurchase of credit and the Zero Rate Loan come closer, we are actually talking about a Zero Rate Loan repurchase by a banking institution when buying mortgages.
Is the Zero Rate Loan eligible for a credit surrender?
If you want to make a Credit Redemption and want to know if it is possible to keep your Zero Rate Loan, you must first check two things:
Respect your debt ratio
The calculation of the debt ratio includes the monthly amount of the Zero Rate Loan. If the monthly amount is below the 33% debt bar, it is then possible to exclude the PTZ from a credit buyback transaction.
If the monthly amount exceeds 33%, the bank will refuse to make a purchase of credits without including the Zero Rate Loan, so it will be less advantageous. In the same logic, if the monthly payments of your Zero Rate Loan increase, then the rate of indebtedness must support the monthly payments throughout the duration of the repurchase of credits.
Check the guarantee of the original home loan: Mortgage
- When a bank takes out a mortgage that includes the Zero Rate Loan and the main mortgage: a new mortgage is made on the real estate (which guarantees a repurchase of credit requested), it is then necessary to buy the two loans. The Zero Rate Loan benefit will be lost.
- If the PTZ is affiliated with a first mortgage guarantee, then the zero rate loan must be included in a credit buyback transaction, and thus becomes an interest credit.
- In the case where the PTZ is not mortgaged, then the redemption of credit and other credits can be done without taking into account the loan at zero rate
Should the Zero Rate Loan be included or excluded from a credit surrender?
In the case where the ptz is excluded from the repurchase of credit
A Zero Rate Loan is not transferable from one bank to another
He must stay in the bank where the loan was taken out. Every time a bank grants a loan at zero rate, it receives financial support from the state. It is complicated for a new bank that buys the PTZ to ask the initial bank for the remaining amount of state aid.
The purpose of the credit redemption is to have another bank than yours take the trouble to buy back your principal mortgage and other loans at a lower rate than before, and without taking over the PTZ. In other words, do not take into account the total amount of the Zero Rate Loan in a project of Purchase of Credits, keeping it in the bank that granted you your PTZ, your rate at 0% will then be kept on your loan .
What are the benefits of buying back a loan when you benefit from a 0% interest rate
- A loan and a single rate over the same term, regardless of the loans that were bought back
- Reducing the debt ratio to take a loan or save
- Keep a Zero Rate Loan that has already been subscribed
Difficulties may arise during a credit redemption that excludes PTZ
A Zero Rate Loan is often subscribed by the bank that has granted a mortgage, so it is normal that it wants the PTZ to be repaid in the first place. For the borrower, the interest is to repay the principal credit first.
As a general rule, prepayment, whether total or partial, by a request from the borrower can not be made before the total repayment of other loans that contribute to the financing of the operation carried out by the same institution.
A borrower may, after a request has been made, choose how the prepayment is between the principal loan and the Zero Rate Loan. If your principal mortgage is redeemed, but not the Zero Rate Loan, you should ask your bank that your money is spent on the repayment of your principal home mortgage so that the cost of real estate financing is reduced, and that a copy the request is kept.
in the case where the ptz is included in the repurchase of credit
During a credit redemption, if a new bank also buys your Zero Rate Loan, it will change it into a loan that includes interest, like all other loans.
However, it is possible to redeem a Zero Rate Loan at the same time as other real estate loans, but a borrower must waive its 0% interest rate which will be substituted for a loan with interest.
Our current period has very low mortgage rates, it happens that borrowers abandon their Zero Rate Loan by placing it in the Credit Purchase transaction, this may be more advantageous depending on different projects.
If a bank accepts your credit surrender and you are willing not to take a Zero Rate Loan, you need to analyze two things:
- The interest rate that is proposed must logically be more interesting than the rate originally proposed
- The duration of the credit and its cost compared to the loss of the interest rate at 0% on part of the loan