Credit: The Secret of a Successful Negotiation

Mortgage rates are at their lowest. It is the right time to borrow, as long as you master all the tricks of the credit.

Good news never comes alone: not only the housing market was released after a few difficult months, but the financial conditions are also in good shape, thanks to low interest rates. It is now possible to borrow an average of 3.40% over 15 years and 3.55% over 20 years. Just last year, buyers had to pay an additional 0.50% to finance the acquisition of their apartment. There is a difference in the size of the scale of a real estate transaction involving hundreds of thousands of dollars.

Thus, a couple who borrowed 200,000 euro over 20 years in September 2009 reimbursed 1217 euro per month for a total cost of the credit of 92,080 euro. The same operation performed today only costs 79,600 euro or 13% less after Empruntis.com calculations. The story is even crueler when it comes to those who bought in October 2008, at a time when the credit rate stood at 5.40% over 20 years: they had to pay 1365 euro per month for a total credit cost of 127,600 euro. But all is not lost for those who bought in 2008 and 2009, since they can now renegotiate their loans.

It appears that the current period represents an extraordinary window for candidates to purchase from the point of view of financing because the savings on credit can be translated into purchasing power, thus into more square meters. Thus, a refund of 1,500 euro per month over 25 years could buy 81 square meters in Marseille in September 2009 or 97 square meters today, the equivalent of an extra bedroom for the same monthly payment.

Even more good news, these conditions should remain favorable to borrowers during the months ahead. Evolving from this summer to a low record of 2.50% over 10 years, the government bond used as a reference rate of fixed rate mortgages has indeed no reason to go back in the current economic climate. “The best credit rates will probably spend 15 years at the symbolic threshold of 3% on the occasion of the funeral estate in the coming weeks”, predicts Christian Camus, CEO of broker MeilleurTaux.com. Same story at the rival Empruntis.com: “Buyers will benefit from very favorable conditions, with rates below 4% over 20 years, at least until mid 2011″, said the spokesman Mael Bernier.

Another avenue is open to Aujourd’hui buyers in search of better funding. The reviewable credit rates are indeed too low. Their level does not depend on the period of 10 years, but on the rates in the short term, as the 3-month Euribor. However, it has been operating below 0.90% since the summer. “Our customers can borrow at 2.50% over 15years and at variable rates, with a cap at 4%. The situation is very favorable to this type of credit because short rates should stay low permanently”, said Etienne-Marie Airiau, the general director of the European Private Bank. The client pays fixed monthly payments, but the credit period is extended in case of rising interest rates. However, these products are a bit complex and reserved for well-advised borrowers, borrowers well-versed in all jurisdictions.

Those who choose a classic fixed rate debt may nevertheless optimize the costs, including through competition between banks and without neglecting any public support. The rethinking of assistive devices is available for purchase from 1 January 2011, with the abolition of the Tepa tax credit, the zero-interest loan and the Pass-Land for the benefit of new PTZ +. The rate of a mortgage is also due, in part, to a negotiation between the bank and its future customer. Thus, it is better to show your credentials: “We ask our future customers for the last three bank statements, but we go further with the payment. It is better to have a credit file without a hitch, this being a sign of sound management of the budget and avoiding overdrafts”, said Sophie Magnan, product manager at Credit Foncier.

Finally, it is possible to significantly reduce the cost of the credit from 1st September by negotiating the loan insurance through the entry into force of the law. It usually costs between 0.25% and 1% of the capital borrowed, which is a significant sum when it comes to a low rate credit. “In many cases, the customer can find an individual insurance half as expensive and ensure the collective contract of the bank”, said Stanislas Di Vittorio, the founder of the comparator insurance Assurland.com.
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