The “trans” what? Few people imagined the existence of this clause and therefore knew the advantages and disadvantages. You want to know more ? The majority of French people change their housing in the 6 or 7 years following the subscription of the loan, can one then sell his house without repaying his loan? This is exactly what portability allows
1. What is mortgage portability? Why do you have to think about it?
The portability of the loan is an unknown option that has the great virtue of saving you a lot of money. The loan transfer clause is not always negotiable, but it is worth asking for it. It is negotiated when you subscribe to your mortgage before publishing offers.
Transfer clause: keep your loan with the same conditions
Transferring your loan is like keeping your loan at the starting conditions (rate, maturities …) for a property other than the one originally backed by the loan. In many cases, it will be for example to subscribe to a new loan when buying a good that replaces the previous one.
The advantage of changing the purpose of your mortgage is that you keep the same conditions. So you are lucky if the rate is doubled: you can keep the initial rate and therefore avoid taking a loan at the current higher rate.
Transfer your loan: a low-cost option
Setting up this option does not represent an additional cost in setting up your home loan. If you use the transfer clause, you will be charged a management fee, which is a fee for the administrative efforts of the banks. According to the banks, the benefits can vary within a range of 0 € to 1000 €.
If your file is complex, for example with a loan relay or through an SCI , the fees may be a little higher. But it will always be cheaper than if you had new funding.
Avoid prepayment penalties
You can of course change house during loan. Without the possibility of transferring your loan, you will have to repay your loan and take out a new loan.
When closing the old loan, the bank often charges you with early repayment fees, unless they have been negotiated at the signing of the loan. These fees represent 3% of the amount of the remaining capital of the or 6 months of interest. Here again, you save a lot of money (gain of about 6 months of interest).
Avoid warranty fees
Similarly, when you repay a loan and then borrow again to buy your home, you will pay a guarantee fee. You avoid the burden of a new guarantee to put in place on financing (gain of about 1% of funding)
It’s good to know, right? So do not forget to ask for portability when applying for a loan.
2. What are the conditions for setting up the transferability clause?
There is strictly no problem in setting up the loan transfer. So if you benefit from two proposals with similar characteristics you have every interest to take the one with transferability!
However, this option will not be applied upon request. The new property must meet certain conditions:
- The price of your new home must be at least the same value as the capital you have to repay. Without this, the transfer will not be possible.
- It is necessary to respect the object of the good . If the loan was made for your original residence originally, you will need to be able to transfer it only to your primary residence. If your goal is to make the transfer on a rental investment you will not be able to.
- No rejection of the monthly payment of the credit must have taken place.
- If you need a complementary loan , it will have to be done in the same bank that owns the transferable loan.
3. Not all banks offer loan transferability
The bank is authorized not to implement transferability and does not need to give you the reason for its refusal. Often, it’s not against you but because of the financial context. For example, in times of low interest rates, there is a risk for rates going up. The risk is high for the bank because it will have to finance with loan conditions more expensive than you.
In periods of low interest rates, fewer and fewer banks offer loan portability for this reason. However, it is not hopeless! Depending on the relationship with your bank, she may agree to lose money on your financing. She will wonder how much you are willing to make efforts on your side, that is to say subscribe to other products (credit card, savings account etc.)
4. Some examples of conditions of implementation of the transferability in different banks.
The loan transfer on another object is subject to the prior agreement of the Lender and is subject to compliance with the regulations applicable to each type of loan and specified in the specific conditions specific to each type of loan.
The loan transfer to a third person is subject to the approval of the new borrower by the Lender. In the case of loans subject to specific regulations, the transfer is also subject to compliance with applicable laws.
If you sell the property financed by this credit to buy another one, your credit can be transferred to your new acquisition provided your credit has been repaid without any incident of payment and subject to study. and acceptance of the surety and the Lender.
The borrower may request to postpone his loan on a new real estate transaction within six months after the sale of the financed housing, under the conditions that his new residence has the same destination and has the characteristics identical to those for which he has obtained loan and that the loan has taken place without payment incident. The borrower may also request to transfer his loan to a third party provided that the latter fulfills the conditions required for the granting of each type of loan. These two transactions are subject to prior approval by the Bank and compliance with the regulations in force for the operation financed. In the event of sale of the property in which the work is carried out using the loan financed by the Bank, all sums due will be required.
5. An example to better understand
You have 150 000 € of capital to repay for your mortgage and your mortgage offer contains a transfer clause. You want to reinvest 200 000 €. What will be the impact on a loan with a remaining term of 15 years?
|Old credit||New line||Without transferability|
|Amount borrowed||150 000 €||50 000 €||200 000 €|
|duration||15 years||15 years||15 years|
|Monthly payment excluding insurance||965.26 € / month||369.84 € / month||1479.38 € / month|
|cost of credit (interest only)||$ 23,746||€ 16,571||$ 66,288|
|Cost of new warranty fees (about 1%)||0 €||500 €||€ 2,000|
|Total||$ 40,817||68 288 €|
|Result||Gain 27,471 €||Loss 27 471 €|
In this example, keeping your old financing and associating it with another loan will save you € 27,471. Youpi!