What is the repurchase of credits for senior or retired?Uncategorized
For future retirees, it is essential to prepare for the drop in income caused by the cessation of all professional activity. On average, this amounts to 30%, and according to recent figures, it concerns 85% of French people, in particular, those who do not receive an annuity or have not invested their savings. And those who have credits to repay can, therefore, have significant difficulties in making ends meet.
Anticipate loss of income
To anticipate this reduction in purchasing power, the repurchase of senior credit represents a relevant solution. All debts are grouped into a single loan, the longer duration of which reduces the monthly payment.
The objective is to allow a return to a balanced budget while simplifying the management of personal finances. The new duration of the credit is calculated according to the new income in order to return to a debt ratio of 35% maximum, or up to 40% if the remainder to live after payment of all charges (including the reimbursement of the credit) is sufficient to cover current expenses.
The possibility of rediscovered savings opens up many opportunities :
- Hobbies ;
- work in the main, secondary or rental residence;
- purchases of capital goods or a vehicle;
- help for children/grandchildren;
- payment of inheritance tax;
- payment of the ISF without resorting to the sale of bearish shares;
- improvement of daily living comfort;
- creation of additional savings…
Products specially designed for retirees and pre-retirees are multiplying accordingly. They can be subscribed from the age of 50, for an end of a loan at 85 years, even 95 years.
Even at 69, it is, therefore, possible to find proposals to buy back senior credits with a duration of 25 years!
Certain financial organizations even offer formulas with declining repayment levels or with the possibility of upward or downward revision of the maturities. Even tenants can consolidate senior loans from their consumer loans for up to 12 years.
In addition, in order to protect yourself and your loved ones, taking out personal loan insurance is recommended. Thus, in the event of a life accident, the credit taken out does not become a burden on the surviving spouse, children, and grandchildren.
Understanding the situation of retirees in France
The mortgage market has been dynamic in recent years. Falling interest rates and incentives, including strengthening the zero-interest loan, have largely contributed to improving the creditworthiness of households, including seniors.
Unfortunately, the latter are among the most vulnerable borrowers: in a situation of over-indebtedness, with excessive credit charges, forced to go into debt to make up for the month. In 2010, the over-65s represented 16% of so-called fragile households.
They also represent 13.6% of credit holders (one or more), particularly consumer loans necessary to cover current expenses. The majority of them note a deterioration in their financial situation. For comparison, the average for all age groups combined is 40.4%.
This strong increase in the use of consumer credit is explained by their relative ease of granting, itself due to their very short term. Access to a mortgage is however more complex for seniors. In 2010, the percentage of those over 65 was only 5.1%, while that of those 55-64 exceeded 15.1%.
A way to balance your budget before retirement
Generally, seniors have settled the loan that financed their main residence before retirement. If their expenses have been reduced considerably, the transition to retirement however also often involves a drop in income with the loss of part of the salary. It is therefore important to anticipate this change, in order to prevent a budgetary imbalance.
The credit grouping adapted to seniors is booming to meet the requirements of this new wealth situation. After years of reluctance to provide loans to older citizens, the banks have indeed realized the potential of this specific clientele. In fact, in addition to the property assets available to most seniors, the extension of life expectancy reduces the risk of non-payments due to the death of the credit subscriber before the end of his contract.
This financial package is very common today, mainly because of the growing difficulties encountered by this segment of the population. With an average pension of $ 1,450 for 169 quarters worked, their resources are no longer sufficient to ensure the payment of monthly payments for loans taken out during their working life, and the amount of which has not changed. At the same time, the over-indebtedness of French households is increasing.
But it also allows seniors to take full advantage of their retirement after many years of professional activity. As age is no longer an obstacle and being relieved of their obligations, they can carry out all kinds of projects thanks to the grouping of loans for retirees. By reducing their monthly expenses, this operation gives them back the necessary purchasing power.
Types of credit repurchase for senior
A bank or loan company buys back all of the senior’s outstanding loans and offers him a contract to replace the reduced monthly payments compared to those of the initial debts in return for an extended amortization period. The aim is to bring the debt ratio down as much as possible.
The operation is possible even after 60 years for a maximum duration of 25 years, which brings the end of the loan beyond 85 years. The duration is determined by the amount of retirement or early retirement pensions.
Declining balance is possible, that is to say that the monthly payments are reduced upon retirement, often a sign of lower-income. But the deadlines can also be revised upwards in order to get into debt for a shorter time. Finally, specific insurance is provided to cover senior borrowers and their heirs.
Purchase of credits for senior owners
Senior owner, you can combine consumer loans and / or a mortgage to obtain a single debt with reduced monthly payments. If a mortgage is included in the debts to be redeemed and its share of the total outstanding exceeds 60%, this is called the repurchase of the mortgage. Otherwise, it is a grouping of consumer credit.
In the event of repurchase of mortgage for retirees, the taking of a guarantee is compulsory to protect the lender against unpaid debts. This repurchase of loans with mortgage guarantee requires the intervention of a notary, and turns out much simpler if it is entrusted to an intermediary like a “non-exclusive agent in the repurchase of credits”.
This experienced intermediary analyzes the profile of the applicant to ensure that it meets the criteria imposed by the lenders. These include the level of income, the debt ratio and the remainder to live. After confirming the feasibility of the operation, he prepares the file with the supporting documents required by the credit institution. The latter must then accept or reject the request.
The 3 types of mortgage loan redemptions for retirees
Considering that most retirees own real estate, lender organizations essentially offer mortgage buyouts of 3 types:
- “Simple”: the applicant’s property is mortgaged. The loan must be repaid in full before the age of 90.
- “Rechargeable”: a pre-existing mortgage is again mortgaged to cover the new financing. The last maturity must be settled before 90 years.
- “Life annuity”: it is intended for owners aged 65 and over. He retains ownership of his property without paying a draft. On his death, the property is transferred to the lender as repayment of the credit.
Credit repurchase for senior tenant
Consumer credits are consolidated for senior tenants. This financial transaction is very advantageous in reducing the impact of very high rate credits (particularly revolving loans. The new single credit contract which replaces all the others is accompanied by reduced monthly payments.
The procedure is similar to that of a conventional funding request. A first analysis of the file confirms its feasibility and suggests suitable financing solutions. When the file is completed with all the necessary supporting documents, a broker or an intermediary can submit it to different partner establishments in order to obtain the agreement and the best conditions (renegotiated rate, staggered reimbursements, reduced monthly payments).
Note, however, that a possible FICP or FCC filing prohibits the use of loan consolidation since no establishment accepts to finance a person registered as having had payment incidents for their previous debts.
Redemption of contribution quarter
The lowering of the age of entry into the workplace penalizes many retirees on the issue of the number of quarters of work required, depriving them of a full pension. Thanks to the grouping of retirement credits offered by certain lending institutions, they have a chance to increase their rights.
Our advice on buying back credits to prepare for your retirement
The extension of the lifespan in France poses increasing problems, including in the field of credit. In 2010, life expectancy for those over 60 was 22.4 for men, compared to more than 27 for women. In addition to this problem, the increase in dependence complicates access to credit.
Fortunately, there are solutions, but always take the time to compare several buyout offers and read all of their clauses in detail.
This financial package has many advantages :
- an immediate gain in purchasing power or cash flow;
- and improving financial stability.
But it is also accompanied by drawbacks, especially in terms of cost. Indeed, the lengthening of the repayment period and the costs linked to the operation increase the overall cost of the credit. In addition, if the subscriber dies and he was not covered by borrower insurance, his relatives inherit his debt.
The best way to understand your interest in opting for a grouping of your credits is to contact us. Our advisers are specialized in loan repurchase. They will surely be able to advise you and guide you towards the best solutions to find a serene financial situation.