Changes in the course of the cost of money can in some cases cause a “change in the course of the contract” to become advantageous: in economics this change is called a renegotiation.
Legally, it can take different forms:
a) the extinction of the old debt and the constitution of new financing and a new mortgage (“substitution” credit);
b) an agreement which simply modifies the old loan agreement (renegotiation in the strict sense);
c) since February 2, 2007, the subrogation in the mortgage (known as “portability” of the mortgage).
In the first case, we give birth to a completely new financing transaction in terms of amounts, collateral and duration: it is therefore a particularly flexible solution, but increased by the cost of closing the previous file and concluding of a new contract.
Simple modification is arguably the cheapest solution of all, but also the most restrictive, since not only must the limits of the existing debt be respected, but an agreement must also be made with the original lender.
Finally, through subrogation, the old debt is, so to speak, taken over by a new bank which takes the previous mortgage as collateral: the limiting factor consists in the requirement that the amount of the new loan be identical to the residual debt of the bank. ‘old, and to the object of the mortgage; the advantage consists in saving the costs of registering a new mortgage, and in certain tax facilities put in place by the legislator.
Notaries, consumer associations and banks continue to seek to resolve certain concrete operational difficulties to allow secure and profitable use of this new instrument.
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