Almost two out of three real estate loans are guaranteed by a bank guarantee. However, this surety can sometimes be recovered when you pay off your loan. Who benefits? For what amount?
Champagne! You finally settle the mortgage that you have repaid for so many years and, icing on the cake, the bank pays you a month later an amount that can exceed a thousand euros. This surprise payment is the return of part of the Crdit Logement deposit, one of the many lines of additional costs in the loan offer.
Flashback. When you tie up your credit file, the bank requires collateral: most often either a mortgage or a surety. A generally rather constrained choice. If the bank demands the bond, another dilemma presents itself: the deposit Crdit Logement, a subsidiary organization of all the major French banks, or the guarantee of the internal subsidiary of your bank. However, the outcome of this choice – often constrained, here again – depends on the existence or not of a restitution.
Read also: Between mortgage and surety, how to choose?
Who benefits from a return of the deposit?
The guarantees of companies which are subsidiaries of banks are often a little cheaper, Judge Ludovic Huzieux, co-founder of Artmis Courtage, but you do not get any refund when leaving, unlike Crdit Logement! Neither CAMCA (a subsidiary of the Crdit Agricole group), nor CEGC (Banque Populaire-Caisse dpargne group), nor Crdit Mutuel Caution Habitat offer any return of part of the deposit upon reimbursement., as confirmed by the concerned banks MoneyVox.
From the borrower’s point of view, the diagram is simple: if the loan guarantee is that of the subsidiary body of your bank, do not anticipate any refund, if it is a Housing Credit deposit you will receive a refund.
Why do bank subsidiaries not return the deposit?
We are the only surety company to have a mutual guarantee fund (FMG) and therefore a mechanism for restoring part of the guarantee costs, says Jean-Marc Vilon, Managing Director of Crdit Logement. Basically, your surety feeds a fund with all the current sureties, a jackpot intended to pay the foreign loans in the event of an incident. Then you get part of the down payment at the end of the credit.
Operation differs in banking subsidiaries (1). CEGC fully takes charge of the risk of non-repayment of real estate loans, without constituting a safety cushion (the guarantee fund) charged to borrowers, explains the BPCE group subsidiary.
However, an objective comparison of the costs between these solutions and the Crdit Logement deposit is not possible since only Crdit Logement has an online simulator.
Estimated costs of different guarantees, for a loan of 200,000
- Housing Credit: 2630, but before return partial
- CAMCA (Crdit Agricole): 2400
- CMH (Crdit Mutuel): 1092
- SACCEF (CEGC, Caisse d’Epargne): 2400
- CNP (for some Caisses d’Epargne): 1,700
- SOCAMI (for certain Banque Populaire banks): 2108
- Bred Habitat (for Bred): 2200
Estimates provided by Artmis Courtage (be careful, prices vary depending on the period, the amounts borrowed, the loan term, etc.).
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What will be the amount recovered?
Whatever the organization, the cost of the bank guarantee is estimated between 1% and 1.5% of the amount borrowed. If this is a Housing Credit deposit – which concerns 20% to 30% of the loans you can get back about half of what you paid out on signing.
Approximately because the calculation is much more complex! In detail, the original grant is split into two: one bond commission, fixed and which remains acquired Crdit Logement in remuneration of its intervention, explains Jean-Marc Vilon; and one payment into the mutual fund (FMG). It is the sum going into this FMG that can be returned: approximately 70% of the sum paid into the FMG.
Example of restitution
You borrow 200,000, and your bank uses Crdit Logement, at barme Classic. The online simulator announces a deposit commission (non-refundable) of 620, and 2010 paid into the mutual fund, i.e. 2630 advances the signature. On this basis, under the current reimbursement conditions, you get 1389 at the end of the loan, or a little more than half of the sum advanced (and 69% of the sum paid without the FMG). The final cost, after restitution, therefore amounts to 1241.
The barme Initio (reserved for borrowers under the age of 37) Crdit Logement allows it to pay the flat-rate commission only at the end of the loan: the final cost is close (1331) but the sum paid for the signing of the loan is lower (2010), the refund it is also mechanically weaker (679).
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When will you receive this amount?
Is the outcome of the repayment of your loan, either at the time of resale of your property, or if you reengage your credit by going to another bank. In short, when you pay off your initial loan, even if you are about to borrow again. At the end of the loan, or at the time of its early repayment, the refund is automatic: in the following month at the end of the loan, provides Crdit Logement. It is your bank which returns this amount, or Crdit Logement directly if you request it.
Can You Avoid New Guarantee Fees If You Sign A New Credit? No, with one exception: transferring the deposit from one loan to another is only possible if you stay with the same bank, for example if you buy a new main residence without changing banks.
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Can you anticipate precisely your return?
No, not their euro! The above simulation applies only to current market conditions. However, the refund rate, which is around 70% of the payment in the FMG, is updated quarterly. If Crdit Logement has to intervene for many foreign loans, then the refund rate will drop.
Contractually, the refund rate can be 0% 100%, specifies Jean-Marc Vilon. In the event of extreme loss of loans, it is legally possible not to receive any refund. But that never happened! Over the past 10 years, and despite the subprime crisis, the refund rate, which all applies, fluctuates between 66% and 73%.
Does the Covid-19 crisis threaten the return of your deposit?
In the current context of crisis, we do anticipate a drop in the refund rate, concedes Jean-Marc Vilon, but not in an extremely significant way. In view of all the support mechanisms provided by the state, for the real estate credit market, we do not anticipate a risk of non-reimbursement greater than what we experienced after the 2008 crisis.
Thus, even in this period of health crisis, with an increased country risk in 2021, a drop in the refund rate below the 60% mark does not seem to be the order of the day.
Read also: An increase in country risk in 2021 for real estate loans
A fair restitution between the borrowers?
The refund is the same for everyone !, insists the general manager of Crdit Logement. In fact, the rate validated each quarter then applies to all borrowers terminating their credit during that quarter. But the rate varies over the years: the equity therefore means for two borrowers who pay off their loan at the same time, but not necessarily for two people who borrow at the same time. For the same loan concluded in 2008, if one pays off its loan in 2019 and the other in 2021, the second risks obtaining a slightly lower repayment.
(1) CAMCA and CEGC are insurance organizations, while Crdit Logement has credit institution status, just like CM-CIC Caution Habitat.
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