Buyouts, renegotiation, bridging loans
Renegotiating your mortgage or having it refinanced: the calculation that tells you whether it is worthwhile
Renegotiating or refinancing your mortgage is only worthwhile if the interest saved exceeds all costs. The method in six lines, and when to abstain.
Renegotiating your mortgage or having it refinanced is only worthwhile if the interest saved exceeds all costs. The net gain is calculated as follows: the remaining interest under the current contract, minus the interest under the new contract of identical duration, minus the exit penalty, the new guarantee, the administrative fees and any release of the mortgage. No difference in interest rate is sufficient on its own: on a mortgage that is well advanced, the operation may yield no benefit.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
The update date is the date the content was last checked against its sources.
Key points
- The profitability of a renegotiation depends on the product of three elements: the interest rate differential, the outstanding capital and the remaining term.
- The complete calculation is a net gain: the remaining interest under the current contract, minus the interest under the new contract, minus all costs.
- The costs to include comprise the exit penalty, the guarantee for the new loan, the administrative fees and any release of the mortgage.
- On a mortgage that is already well advanced, the bulk of the interest has already been paid and the costs remain immediate: the operation may yield no benefit.
- First seeking a firm offer elsewhere, before returning to see your own bank, gives you a stronger bargaining position for renegotiating.
Renegotiating your mortgage only yields a return if the interest saved exceeds all the costs. Perform this calculation yourself before any appointment for mortgage renegotiation.
Renegotiation, buy-out, consolidation: choose the right operation
Renegotiation is carried out with your bank, by way of an amendment. A buy-out involves settling the loan with another institution. Credit consolidation is a different matter, not covered here.
| Renegotiation | Buy-out by another bank | |
|---|---|---|
| Legal basis | Amendment to the existing loan | New loan agreement |
| Early repayment compensation | Not applicable: no capital is repaid | Due if the contract provides for it, except in cases of legal exemption |
| Security | Retained | To be re-established, and to be released on the previous one |
| Administrative fees | Negotiable, often reduced | Full amount |
| Leverage | Low: your bank knows you are staying | Real: two institutions are compared |
| Typical timeframe | A few weeks | A full credit application |
The consolidation of consumer credit: its mechanism.
From what interest rate gap does the operation become profitable?
There is no universal threshold: the gain depends on the gap, the outstanding capital and the remaining term. A large gap towards the end of the loan yields nothing.
Forget the rules of thumb. Look in your amortisation schedule at the share of interest already paid: the early instalments are mostly interest.
Costs to include to avoid overestimating the gain
The early repayment compensation, the new security, the administrative fees, any potential fees, and the release of a mortgage.
Fraction du montant initial du prêt. C'est une faculté que le contrat peut prévoir, pas une obligation légale : à vérifier dans vos conditions générales.
- En vigueur depuis le
- Source
- Article L. 313-47 du code de la consommation — Légifrance
The compensation is capped at the lower of two calculations, based on two different bases.
Calculé au taux moyen du prêt, sur le capital effectivement remboursé par anticipation.
- En vigueur depuis le
- Source
- Article R. 313-25 du code de la consommation — Légifrance
Assiette différente du premier plafond : le capital restant dû avant le remboursement, et non le capital remboursé.
- En vigueur depuis le
- Source
- Article R. 313-25 du code de la consommation — Légifrance
Professional mobility is exempt, provided that you sell the property.
- vente du bien immobilier faisant suite à un changement du lieu d’activité professionnelle de l’emprunteur ou de son conjoint
- décès de l’emprunteur ou de son conjoint
- cessation forcée de l’activité professionnelle de l’emprunteur ou de son conjoint
Liste limitative. La condition de vente du bien est déterminante dans le cas de la mobilité professionnelle.
- En vigueur depuis le
- Source
- Article L. 313-48 du code de la consommation — Légifrance
A mortgage is released by notarial deed: the release. A surety may return a portion to you: what is refunded. The new security is also quantified: surety or mortgage.
Une composante parmi d'autres du coût d'une inscription, assise sur le montant de la créance garantie. Ce n'est ni le coût de l'hypothèque, ni celui de la mainlevée.
- En vigueur depuis le
- Source
- Légifrance
The net gain in a single formula, step by step
Net gain = remaining interest on the current contract − interest on the new contract of identical term − all costs. If negative, the operation costs money.
Compare at identical term: extending the term lowers the instalment but raises the total cost.
| What to note down | Where to find it |
|---|---|
| Outstanding capital as of today | Amortisation schedule, last completed line |
| Residual term in months | Amortisation schedule, number of remaining instalments |
| Nominal rate of the current loan | Accepted loan offer, or the most recent amendment |
| Total of the remaining interest to be paid | Sum of the ‘interest’ column of the schedule, until the end |
| Early repayment compensation clause | General terms of the contract, early repayment section |
| Nature of the security in place | Loan offer, and the notarial deed where applicable |
Then the instalment formula gives the cost of each scenario.
On an older loan, the quick calculation ‘spread × capital × years’ lies: the capital decreases, the interest has already been paid, and the costs are fixed.
Same spread, two loan ages
Assumptions: a loan of €250,000 over twenty years, signed one point above the average rate over twenty years in July 2026; a new loan at that average rate, over the remaining term; compensation at the legal cap.
Repère de marché retenu pour l'exemple, hors assurance et coût des garanties.
- En vigueur depuis le
- Source
- lobservatoire.creditlogement.fr
| Loan age | Outstanding capital | Remaining interest avoided | Compensation at the cap | Share of the gross gain taken by the compensation |
|---|---|---|---|---|
| 34 instalments paid | approximately €225,900 | approximately a quarter | approximately €4,700 | approximately a fifth |
| 144 instalments paid | approximately €125,300 | approximately a quarter | approximately €2,600 | nearly half |
Estimate, without the value of an offer. Calculation of 29/10/2026, constant annuity formula, rounded; security and file fees not deducted.
The share avoided is the same, but it applies to far less interest: after twelve years, the compensation and the fixed costs eat up most of the gain. Often, the right decision is to do nothing. Recent loan, large capital, net spread: the operation is decided quickly.
Should you renegotiate with your bank or change institutions?
Aim for an amendment, with no penalty and no new security. However, first obtain a firm offer elsewhere: without it, your bank knows that you will stay.
Read the amendment as an offer, and calculate the income domiciliation that a buyout often requires.
The often more profitable alternative: borrower insurance
Changing insurance does not affect the rate or the security, incurs no penalty, and can be combined with a renegotiation.
Change your borrower insurance. Need to take a breather for a few months? Adjust, defer or suspend your instalments.
How many times can the same loan be renegotiated?
There is no legal limit, provided that the market has moved and that each operation remains profitable.
And if your loan was taken out during a period of high rates?
This is the case for loans from late 2023 and early 2024, at the peak of the Banque de France series. A one-point difference on a young loan justifies the calculation; three-tenths of a point, rarely.
Three calculated cases: 2023 or 2024 loan, should it be bought out?
Are you moving? Read the loan transfer clause, or look at the bridge loan.
Check your rate with the official records.
Before initiating the transaction
- The amortisation schedule: the remaining interest caps the gain.
- The general terms and conditions, under the early repayment section.
- The security in place, which determines the exit cost.
Is the net gain positive? Create your file or have your net gain calculated over the phone.
Regroupement de crédits
Un regroupement de crédits dont la part des crédits immobiliers ne dépasse pas 60 % du montant total de l’opération relève du crédit à la consommation (C. consom., art. L. 314-10, L. 314-11 et R. 314-18). Le code impose alors la mention suivante sur sa publicité :
Un crédit vous engage et doit être remboursé. Vérifiez vos capacités de remboursement avant de vous engager
Sources
Read next
- Mortgage rates in Lyon: current rates by loan term
- Mortgage amortisation schedule: how to read and check it yourself Amortisation schedule: verify each line with three checks, read the interest, capital and insurance, and see the effect of an early repayment.
- Remortgaging in Lyon: the steps, in order, for changing bank Having your mortgage taken over by another bank: documents, processing, offer, settlement of the old loan, and the pitfalls that cause a remortgage to fail.
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