In 2009, my wife and I became owners (or rather the bank… 😉 ) of our main residence, a nice house in the suburbs of a big city. Happy parents a few months earlier, we had managed to find a larger and more interesting property than our borrowing capacity suggested, with a rather attractive discount on the proposed price: €40,000 less for a property displayed at 250 000 € net seller ! All in all, a very good year in 2009, with the passage through a broker for our mortgage, which again saved us a few thousand euros. In short, we were happy, we were young, we were happy (and we still are 🙂 ), and we were therefore owners… of a credit over the next 25 years!
Nothing serious you will tell me, and you will not be wrong… But 25 years is a long time and thinking that we will have finished paying off our pretty house when we are 52 has a demotivating side! A few years passed and we finally decided to see what it was possible to do to reduce this duration and go below the psychological bar of 50 years 🙂 .
My wife and I are fortunate to each work in fields that could be described as promising, in addition to being interesting, and we have been fortunate to see our salaries regularly increased. It is also a syndrome associated with our early careers, our salary revaluations now tending to be less significant. But overall, we have nothing to complain about, even if with bad faith I could always find fault with it! 😉
Note that at the time we didn’t know much about finance or real estate. We are certainly not experts today, but we like to believe that we have nevertheless acquired a small veneer of knowledge on these subjects. In short, several possibilities appeared to us to use these increases:
As you can imagine from the title of the article, we finally opted for the last solution, but it is clearly not without having thought about the question at length.
Finally, we therefore put our “increases” in the monthly payments of our main residence, with the advantage that the underlying gain presented no risk, and that we could always return to our initial monthly payments, if for various reasons our power to purchase was to decrease. And that’s how we gained 8 years on our credit , the end of which is now scheduled for our 44th birthday! It’s already better!
Note for later: on the credit of our main residence, the prepayments and the adjustments of monthly payments are invoiced to us 150€. Thinking about negotiating this for our rental investment!
At the same time, or rather at the same time to be exact, we took a look at how the rates had evolved and whether it might be possible to earn a few additional euros by renegotiating our credit. We were hearing right to left that with less than a point spread on rates, it wasn’t worth the bother. We still tried our luck, after all, who tries nothing has nothing!
Appointment made with my banker, I arrive with my hands in my pockets, without having prepared my file, and the discussion could be summed up as follows, by caricaturing somewhat:
Conclusion: always, but always prepare your interviews with our friends from the world of finance , otherwise you are sure not to get anything! In short, I then made a few phone calls to set up appointments with competing banks. After having exchanged with 2 or 3 of them, the verdict is clear: in view of the cost of buying my credit by another banking organization, changing banks will not save me a euro. In particular because I have an insurance delegation on my current loan, which would disappear if I changed banks, and this insurance delegation is much cheaper than the insurance offered by the banks. So you will tell me, yes, but the banks have absolutely no right to refuse an insurance delegation , which is completely true. But they also have the right to refuse a loan without any reason…so all in all…
In the end, I still find myself with the simulations offered by these banks, which I watch with regret. That’s when I realize that on one of them it is only a reference to the credit and not the insurance to be affixed to it. It therefore shows a gain of just over €20,000 compared to my current credit. And I tried a little bluff: I resumed an appointment with my current banker, and I asked to align with this proposal without insurance! And the good news is that he accepted! A few signatures later, so we had earned over €20,000 on our previous loan offer , thank you!
And that’s how we reduced our 8-year credit and saved ,000, all by just making a few appointments. Profitable, right? So certainly, these financial and calendar gains are partly only virtual, since they imply that we will go to the end of our credit, but it is our perspective today! In short, a little more than 12 years and it will be settled! Long live!
And on your side, have you ever tried to renegotiate your mortgage? To adjust your monthly payments? Does our approach seem relevant to you?