Let’s study a textbook case today: three years ago, you took out a mortgage of €200,000 to buy your house. The execution of your contract is going smoothly, and you are repaying your monthly premium without any delay. Today, you are considering doing new work on your house and need to borrow an additional sum of €50,000.
Of course, you cannot offer any other guarantees than your house, which is already mortgaged by the first loan.
What is the most interesting solution for you: constituting a second mortgage or buying back your first loan and adding an additional sum of €50,000 guaranteed by the first mortgage?
Let’s examine this recurring question.
Constituting a mortgage involves costs
When you buy real estate, you will often be asked to agree to a mortgage. Often, this guarantee will be a sine qua non condition for obtaining your loan.
Constituting a mortgage involves significant costs that will be added to the purchase price of your house.
Buying back a mortgage is the most advantageous solution
If during the life of your mortgage, you need to borrow new sums of money, for example, to carry out work on your house, it will always be more advantageous to buy back your mortgage, increase it by the new desired amounts, and keep the existing mortgage rather than agreeing to the constitution of a new mortgage, which would incur new costs.
In such a situation, consult your usual broker who will analyze your situation and advise you in the best possible way.
