Real estate prices are on the rise: it may be time to consolidate your loans

Real estate prices are on the rise: it may be time to consolidate your loans



Real estate prices are on the rise: it may be time to consolidate your loans

Debt ratio is a basic criterion for granting a loan. This indicator makes it possible to protect both the bank and the individual who borrows. With mortgage rates rising, and if the borrower is already paying off several loans, it may be appropriate to buy back the credits so they can be financed.

Debt Ratio Respect 35%

The debt ratio is set at 35%, or just over a third of monthly income, and represents a percentage of the income earmarked for fixed and incompressible fees. Thus it includes the basic expenses of the family like rent, monthly loan payments, alimony, etc. The rest of the budget corresponds to the rest for living. This rate makes it possible to assess the indebtedness of the family requesting financing. Thus, the specified debt ratio of 35% makes it possible Securing the process by protecting the lending institution as well as the borrower from any default.

To calculate the debt ratio, simply use our online debt ratio simulator or follow this formula:

(Total Fixed Charge Amount per month / Monthly Income) x 100 = Debt Ratio

The debt ratio, previously set at 33%, has been reassessed by the High Council for Financial Stability (HCSF). 1 . agoVerse January 2022, lending institutions are obligated to respect this ceiling. Beyond that, the funding request was rejected. However, banks can deviate from this rule for 20% of files. Priority is given to first-time buyers who purchase their primary residence.

Buy credits to reduce your debt ratio

Buying back credits is an interesting alternative to finding healthier finances and reducing your debt ratio. Families that accumulate multiple credits can opt for this process in order to reduce the amount of monthly payments that burden the family.

As a reminder, the repurchase of credits makes it possible to restructure the borrower’s finances by combining all debts under one credit and the same credit at one price. In addition to facilitating the management of the borrower’s finances, this process has the advantage Reducing the amount of the monthly payment to be paid. Thus the borrower finds the rest to live on. On the other hand, to reduce the monthly payments, buy-back of credits is accompanied by an extension of the repayment period. This leads to a higher total cost.

Depending on the status of the family, the purchase of credits can be used to:

  • reduce the amount of your monthly payments;
  • Obtaining additional cash to finance a new project;
  • Facilitating the management of their budget thanks to the single monthly payment;
  • Reduce the debt ratio to less than 35% to be able to launch a real estate project.

To find the best offer to buy back credits, broker experience wise. Thanks to his network and knowledge of the market, he finds and negotiates the most advantageous solution for the borrower.

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