Today, and more and more, the rule in mortgage lending is the multiplication of loans. In question, the many subsidized loans offered to households to help them achieve the purchase of real estate. But, with repayment terms generally shorter than conventional loans, these assisted loans increase the monthly payments in the first years of the loan. Hence the interest of carrying out a mortgage smoothing in order to benefit from constant monthly payments.
The principle of the smoothing of mortgage
Zero-rate loan, housing savings loan (PEL), 1% housing loan, civil servants loan … so many assisted loans set up to help households to access property . Loans that are often added to and added to the main loan.
But with repayment terms that are varied and shorter than conventional loans, these assisted loans generate higher monthly payments in the first years of credit, before decreasing thereafter.
The smoothing of the monthly payments thus makes it possible to repay constant monthly payments throughout the duration of the loan, and thus to avoid too important variations in order to facilitate the management of the budget of the borrower.
How to smooth a mortgage?
A household acquires a property and therefore benefits from a zero-interest loan that will be repaid over a period of seven years at the rate of € 290 per month. To this loan is added the main loan, amounting to 155 000 €, refundable with monthly payments of 960 €.
In total, it is therefore 1250 € per month, 290 + 960 €, that will repay the couple during the first seven years of credit, before paying only the conventional loan, or 960 €.
A smoothing of the monthly payments would allow him to avoid these variations and to repay constant monthly payments throughout the repayment period of the loan.
Smoothing from monthly payments or duration?
There are two options when applying for a mortgage lending:
In the first case, the borrower has the opportunity to choose the monthly payment he wants to repay , to the detriment of the duration. In the example, the couple can make the choice to repay, each month, a monthly payment of 990 €, which will extend by a few years the repayment period.
In the second case, it is possible to give priority to the repayment period , for example over a period of 20 years, which will involve slightly higher monthly payments than in the first case, but a shorter duration.
Choose monthly payments or prefer duration? In both cases, the smoothing allows identical monthly payments during the credit period.
The decision to privilege the amount of the monthly payments or the duration of the loan then belongs to each borrower. It should also be noted that banks almost always propose a smoothing of mortgage loans at present, while loans are cumulative and come to fit into the main loan.