Publié par Eric Bertrand, le 27 November 2017
Can we consider the resale of real estate before the end of the credit ?
Yes. It is possible to carry out an anticipated resale. It is planned and regulated in the mortgage agreement. The vagaries of life can sometimes lead you there: divorce, death, or simply change, in France or abroad. That's why it's important to attach importance to it. For if it is impossible to foresee everything, the banks and the insurances, they, employ themselves there, since they meet all the cases of figure.
You can resell whenever you want
Of course, once you become homeowners, it is up to you to choose the use you want to make of your property, including its sale. It's up to you right. You have no legal deadline to wait. That you have not finished paying your loan is another matter, which concerns your relationship with the bank that has granted you the loan.
But what happens to the mortgage when selling your property?
The disadvantages of an anticipated resale.
The main financial disadvantage is that you will not have amortized all the expenses incurred during the purchase. Indeed, the transfer taxes amounting to more than 7% of the value of the property, and the agency fees to 3%, to be a profitable investment, it is necessary that your good took the equivalent of these 10 % in value, once the tax on the capital gains deducted. That is an increase of about 13% in the value of the property. Such an increase is only rarely obtained in 6 months!
In addition to these expenses paid during the purchase, you have paid interest for several years, without acquiring the property. Or having acquired a small share. Indeed, in the calculation of monthly repayments of your loan, the share of interest rates is much more significant than that of capital in the first years, this report is gradually reversed over the years. Thus, if you are at half the repayment over time, you own less than half of the property: perhaps a little over a third.
Finally, we must add specific bank charges that may be stipulated in the mortgage loan agreement. Hence the importance of knowing the terms of the contract: most of the time, these fees are worth several months of additional interest, and are calculated on the basis of the outstanding capital. In other words, these fees, too, are high initially and decrease as you approach the end of the repayment initially fixed.
Reluctantly resale of a family property
This is why resale of real estate is not recommended in the early years. It is generally recommended to wait 6 to 7 years before thinking of reselling.
Nevertheless, we do not always have the choice. If you are the heir to a property purchased by a parent, and you have to share the inheritance, and pay inheritance tax, you are necessarily selling to pay those fees. Unless one of the heirs chooses himself to redeem the property, if it is a property full of history that he does not wish to see out of the family circle. And as long as he has the means.
He must then agree with the bank to eventually buy the credit, even review the rates.
Resale to buy back
It is sometimes possible to transfer a loan to another project, with additional funding. This is complicated because the guarantee of the mortgage is usually backed by the value of the property. It will therefore need other guarantees in return.
On the other hand, if the initial loan repayment payments add up to new monthly payments for a new loan, you need a good revenue base to finance everything. You are likely to seriously tighten your belt for several years.
Unless the resale of the first good is used to acquire a property of less value ...