The tiered loan or pull-out loan consists of building a mortgage, involving several credit formulas. A low-valued type of assembly, which nevertheless has great advantages, even if you have to be aware of its disadvantages. The assistance of a broker is essential here to combine security and optimization of this financing.
How does a loan arrangement in 2 lines work?
The use of a pull-out or multi-line loan makes it possible to reduce the total cost of a mortgage, by playing on smaller sums and varying durations, subject to different rates.
For example, under a conventional loan, a loan of USD 200,000 with an interest rate of 3.20%, granted for a period of 20 years, will cause a total cost of USD 70,960.
As part of a 2-line arrangement, the amount to borrow will be divided into two separate loans. The first of USD 150,000 at 3.20% over 20 years, will generate a total cost of USD 53,280; the second, from USD 50,000 to 2.35% over 15 years, will cost USD 10,300. In other words, an overall cost of USD 63,580 and a reduction of USD 7,380!
What is the point of using a pull-out loan?
With an interest rate that increases in parallel with the repayment period, the use of a pull-out loan makes it possible to play on this variable, to reduce the total cost of financing.
Not to mention that the cost of borrower insurance will also drop. Theoretically, the rate associated with the shortest loan is normally lower than that associated with the longest loan. But, even at the same rate, the weight of insurance is reduced, since part of the loan is insured over a shorter period.
To further reduce the cost of this multi-line loan, it is also possible to act on the guarantees requested by the banking establishment. Skilfully orchestrated negotiation could avoid guaranteeing the shortest loan, if the amount and duration allow.
Regardless of these financial advantages, the pull-out loan makes it possible to gain flexibility and management. In particular, in the event of an inflow of money which could settle one of its lines in advance, without however being sufficient to settle the entire credit.
Who can explain the technicality of the financing operation to you: the broker
Up to now little valued, the tiered loan tends to democratize: today, half of the banks offer it. However, the technicality required for its assembly requires the assistance of a credit broker. The only one likely to “erase” the disadvantages of such a device.
A loan with 2 lines (or more) supposes the subscription to two distinct credits, with two monthly payments, two rates, two guarantees (sometimes), two insurances… Consequently, the borrower must support a change of monthly payments at the maturity of shortest credit. Not to mention that they are higher than a conventional loan at the start.
Naturally, it is possible to carry out a smoothing, to have only one and the same monthly payment throughout the repayment of the property, but this will cause a systematic increase in the total cost of the credit.
Thanks to his technical know-how, the credit broker will allow you to make real savings on the loan, while avoiding repayments that are too heavy to bear, given your personal situation and your financial capacity. Only he is able to operate on the different variables, so that you only benefit from the advantages of this device. Do not hesitate to contact a expert for free advice!