Quite often, unfortunately, retirement means lower income. At the same time, in view of the advancing age of its client, the bank becomes more reluctant to grant a new loan. However, seniors do not stop having projects, far from it … How can retirees cope with the situation and avoid excessive debt? We will see that credit repurchase and retirement are two formulas that match particularly well!
Preparing for retirement well: a necessity!
When the time for retirement strikes, the charges borne are still relevant! Without counting the extras, which weigh just as heavy in the budget of seniors: moving, travel, housing renovation, donation to help children, support for parents … However, a senior is retired from the private sector, the sector public or self-employed (farmer, trader, auto-entrepreneur, etc.), he inevitably sees his income fall compared to the time when he was in activity (-25 to -50%). It is therefore essential to find a solution to make ends meet, such as the repurchase of credit before retirement…
The repurchase of credit in the event of retirement, a saving operation for the seniors
To maintain their standard of living and maintain their budgetary situation, seniors with two or more loans to their credit have every interest in reducing their monthly payments. A financial transaction is specially designed for this: the repurchase of credit, also called grouping of credits.
The repurchase of credit: operation
During this financing transaction, the bank will consolidate the loans, while extending the repayment duration. There will therefore be only one single rate loan. It is this extension of the repayment period which will make it possible to reduce the amount of the monthly payments. The senior who decides to redeem his loans reduces his debt ratio and thus gains in purchasing power. It can also potentially back up a new buyout loan to finance another project.
Good to know: a drastic reduction in monthly payments possible
Depending on the senior’s situation, a repurchase of credit at retirement can imply a large reduction in monthly payments (up to 60%). Please note, however, that the repayment duration largely influences the borrowing rate. If this period is too long, your credit could be more expensive than before the consolidation. Before submitting your file, compare the rates (APR) carefully!
Credit consolidation: two existing forms
Depending on the nature of the loans outstanding, the bank will offer young retirees or future retirees:
- either a buyback of consumer credit (which consists in buying back only consumer loans);
- or a repurchase of mortgage (here, the bank will buy consumer credit and a minimum mortgage).
Retirement credit buyout and borrower insurance
As with a consumer loan or a conventional mortgage, insurance is not compulsory in the case of a loan repurchase at retirement. Only, in fact, the bank often imposes it, whether the borrower is senior or not.
Redeeming your loans: do you need a guarantee?
It all depends on the financial situation of the retirees. If the bank considers it too fragile, it will require the senior to attach one or more guarantees (mortgage property, surety, life insurance and other financial investments) to his file. But in all cases, a senior (like any other borrower) must obligatorily bring a guarantee to the bank if:
- the amount of the combination exceeds $ 200,000;
- the repayment period from this amount goes beyond 15 years.
Credit redemption at retirement, up to what age?
Again, it’s all about the situation. Without a guarantee, retirees can repay their loan up to a maximum of 85 years. On the other hand, for seniors with a guarantee, the bank will be willing to grant a longer repayment term: they can repay their loan until the age of 95.
Credit consolidation has no secrets for you! Are you planning to buy back credit upon retirement? With us and our attractive, fixed-rate buy-back offer, consider a peaceful retirement! As soon as we receive your complete file, receive a response in just 24 hours.