Presented by a member of the majority, a bill aimed at making loan portability possible will be discussed at the start of the school year in September.
Using the money from the sale of your home not to pay off the current mortgage but to finance a new purchase, this is the principle of loan portability. The result is several tens of thousands of euros of potential savings, especially when rates are increasing rapidly and strongly.
How does it work? To fully understand what it is, let’s first recall the classic sequence of an operation for an owner who sells his property to purchase another. He uses the proceeds from the sale of his first home to repay the associated credit early, then takes out a new mortgage for the new property.
Traditionally, the borrower gives up the old loan conditions and has to adapt to the new ones. With portability, our owner will recover the proceeds of his sale only to finance the other purchase, he will therefore continue to repay the credit linked to the property sold and, if necessary, he will take out a further mortgage to finance the new one.
Maintain the loan terms of your first loan
This second credit will certainly be linked to current conditions, but we will necessarily have much lower amounts than a traditional operation.
If the interest rate of your first loan is lower than the current one of your new purchase, you will necessarily be a winner, otherwise you will simply have to not exercise this option.
This is demonstrated by the example of the Vousfinancer broker. I own a house that is now worth 300,000 euros. I want to resell it to buy another one worth 400,000 euros and I still have 200,000 euros left to repay with an unbeatable interest rate of 1% that I obtained in 2019.
With portability I will keep this loan. I use the 300,000 euros from the sale of my house to buy the other one. I will therefore only have 100,000 euros left to borrow under today’s conditions.
In the end, my two loans combined will cost me less than 45,000 euros in interest.
In the traditional version, however, I will repay my old loan early and then open a new one, so I will have to borrow 300,000 euros again (because I still have 100,000 euros left from the sale after repaying my old loan) under the current conditions and, taking into account the amount, for a necessarily longer and therefore more expensive period.
In this case my total interest cost on a single new loan will be more than 128,000 euros. Clearly portability would save me 83,000 euros.
Allow the market to become more fluid
The gain linked to portability could convince many shipowners to put it back housing on the market which they maintain today so as not to lose their loan conditions at very low rates.
Portability could therefore bring more supply and fluidity even if the credit market regains some color again with the slight decline in rates.
According to Crédit Logement CSA, the number of loans increased by almost 70% in April compared to December.
Presented by a member of the majority, this bill will be discussed at the beginning of the school year in September. It remains to be seen the reaction of the banks which could weigh on the debate because the money you could earn is theirs. So it will be tight.