It is sometimes necessary to lower your monthly loan payments to rebalance your budget. As a result of a change in your professional or family situation (unemployment, divorce, illness, retirement…) or even because you have contracted too many credits whose repayments accumulate, you can face a difficult situation.
Two solutions are available to you, the repurchase of credit or the restructuring of debts.
Calculate your current living rest
The remainder to live corresponds to the amount you have once you have paid all your fixed debts. In practice, it is calculated by subtracting from your monthly income, the fixed costs that you must assume each month.
The charges correspond to all these essential expenses that are rents and housing charges (water, electricity, heating, telephone, etc.), but also taxes, loan repayments, transport costs and any pensions paid. The calculation of your remainder, allows you to quickly determine if your monthly repayment is too high for your household.
In general, it is accepted that a living allowance of less than the sum of 400 USD per month brings you closer to a situation of over-indebtedness. It is therefore important to take action as quickly as possible to prevent the situation from worsening.
Evaluate the amount of your optimal monthly payment
After evaluating your current living space, you have a more precise idea of your household budget. If it is too low to meet your current expenses or if it does not allow you to meet your savings goals or your forecasts of occasional expenses, you can choose to lower your monthly payments in order to increase the share of your remainder -to live.
Then determine what would be your ideal monthly payment. You get this value by subtracting from your income all of your essential expenses. You will add up all your fixed charges (excluding credit reimbursement) to establish the amount of these expenses. Do not forget the property taxes if you are the owner or the housing taxes and various charges for your accommodation (garbage collection costs, joint ownership costs.).
Also estimate the expenses that will be more occasional such as vacation or leisure expenses to establish a forecast for the year. The whole of this forecast allows you to obtain an amount of annual expenses. Reduce this sum to a monthly figure, by carrying out the following operation: annual housing charges + annual expenses required + income tax / 12 = monthly expenses cannot be reduced.
Take advantage of the advantages of buying back loans or debt restructuring
Thanks to the repurchase of credits, or grouping of credits, you can redeem all your home loans, consumer loans, debts and receivables, by a financial institution which will replace them by a loan with advantageous conditions. This operation gives you the possibility of reducing the amount of your monthly payments, while also lowering the total cost of your financing.
You can choose to have your credits redeemed by your usual bank but do not neglect to play the competition, in particular by using the services of a credit broker.
If the loan offer that you are made does not allow you to reach the amount of your ideal monthly payment, then you will have the possibility of carrying out a debt restructuring operation. A repurchase of credit aims at lowering your monthly payments in order to decrease the cost of your credits by lowering the level of the interests paid, a restructuring will aim to decrease your monthly payments whatever the price, including if it must increase the cost of your financing, in particular by extending the duration of your reimbursements.
With current rate levels, which remain close to their historic lows, there are opportunities to be seized. Again, your credit broker will allow you to go around the banks in one go, and will give you access to the best offer, based on your borrower profile.