Retirement Credit Redemption: Anticipating Lower IncomeRetirement Credit Redemption: Anticipating Lower Income
When the time comes to retire, a new life begins, but with a significant income decline of the order of 30% on average. This means that purchasing power will also drop for the home, which is sometimes synonymous with financial difficulties, especially when there are still credits to repay. In order to anticipate this problem of the household’s repayment capacity, the purchase of credits can be an optimal solution chosen by many retired borrowers. Replacing all outstanding loans with a single loan with a single monthly payment that can be adapted to new household income is an option to regain some financial comfort.
To live serenely your retirement
According to INSEE data, the average monthly amount of retirement is 1,102 euros for women and 1,588 euros for men. However, being retired does not mean that you are done with debts and loans, let alone lower your expenses, since they remain the same. Although it is true that in general the financing of his property is completed at this time of life, other consumer credits can still be in repayment. It is not uncommon to see many pensioners still in debt when leaving the world of work.
Even when you are retired, it is still possible to take out new loans. Because this period of carelessness where one wants to enjoy life opens the way to leisure, travel, but also to new projects. This is the time for example to build a new development in the house, or to install a pool or to change kitchen. Retirees are known to be active consumers despite the decline in income they face. Many are still taking out loans before leaving professional life.
The repurchase of credits makes it possible to regulate its rate of indebtedness so that it is adapted to the decrease of the incomes of the retired borrower. This should not exceed 33% in general, which is equivalent to the rate set in an indicative manner by banks and financial institutions. It can in some cases reach 40%, provided that the share of the remaining living is sufficient to meet the expenses and needs of the daily. It is a question of being able to assume without being suffocated by all the fixed monthly charges and the monthly payments of the new credit put in place.
The establishment of a credit redemption
It is not necessary to wait until the time of retirement to subscribe to a credit buyback transaction. Many borrowers choose the time of pre-retirement to take control of their finances and anticipate their future income decline. The financial package put in place by the organization chosen to take charge of loan consolidation will therefore at this point be based on the compensation received by Pôle Emploi. It is very useful to know as soon as possible the amount of your retirement pension in order to anticipate the purchase of credits and to evaluate your profit, as well as the length of repayment to choose.
Various reasons are mentioned by retired borrowers to set up such a financial operation: do not touch their savings to cope with an unforeseen, prefer to help their children or grandchildren, live financially in a more comfortable way, etc. The repurchase of credits is also called restructuring of debts, in this sense, it makes it possible to take a new financial departure, that is to say to lighten the amount of its monthly payments to be able to live more comfortably and to finance its activities of leisures and relaxation. The monthly cash flow generated by the loan consolidation helps maintain a certain standard of living and is not significantly affected by the decline in retirement income.
If, on the one hand, the repurchase of credits makes it possible to rebalance the finances and to adjust the repayment of a single monthly payment of credit to the retirement income, it also makes it possible to finance a new project. Concretely, it is then a question of including a sum of additional money in the new financing which will make it possible to take charge of the new desired project. A boost that can be put in place in the short term, either to organize the cruise of his dreams for example or to make the big retirement party with family, colleagues and friends.
Anticipate the decline in revenue
Seniors and retirees are becoming more popular with banks and credit organizations. With the extension of the life, they represent a flourishing market and especially financial security thanks to the durability of their income, their retirement pension for life. The credit repurchase organizations therefore offer specific offers to retirees so that they can calmly anticipate their decline in income. They will thus be able to avoid falling into an uncomfortable financial situation while repaying their outstanding loans and even significantly reducing their monthly expenses linked to them.
The grouping of all loans for retirees is a real key to success of this passage of life, because it will allow him on one hand to lighten his monthly payment to maintain his standard of living, on the other hand to negotiate a interest rate more interesting. In concrete terms, the operation will consist in paying off all the credits still being refunded in order to have only one credit to repay. This single monthly payment will be adapted to the new income of the retiree and taken every month on a fixed date from the bank account. The interest rate can be lowered and is still a fixed rate. In some cases and depending on the situation, the monthly payments can decrease up to 60%. Note that the decline in the monthly payment is possible thanks to the lengthening of the repayment period, which increases the cost of credit.
In summary, it can be said that the advantages of buying back credits at the time of retirement are numerous. They also concern the authorized age of the debtor at the end of the life of the credit, which is limited. And as said, it is not with the advancement in age that we stop having projects, it is sometimes precisely the opposite! Loan consolidation can be up to 95 years old when the borrower has a guarantee and 85 years without a guarantee. This one is used or not, it will depend on several parameters, which are mainly the amount of the repurchase of credits but also the personal and patrimonial situation. The lending organization has security in the event of default of payment of the monthly installments of credit. It can be real estate, a financing plan, a deposit, etc. The borrower insurance is not mandatory in the case of the purchase of credits for pensioner, but it is still strongly recommended. If the borrower wishes to take out insurance, there are many options available to him, taking into account his state of health and his age.