Refinancing in France, known as rachat de crédit, means having another bank buy out your existing loan on better terms. It can save a significant sum, but the costs are front-loaded and the arithmetic only works under particular conditions.
Practitioners generally look for all three of the following before a refinance makes sense.
| Cost | Typical level |
|---|---|
| Early repayment penalty | Capped by law at the lower of six months’ interest or 3 per cent of the outstanding capital |
| New lender arrangement fee | Several hundred to around a thousand euros |
| Guarantee or mortgage registration | Varies with the security used |
| Broker fee, if used | Typically a percentage of the amount refinanced |
Before approaching other lenders, ask your own. A bank would generally rather reduce your rate than lose the relationship and the associated accounts. The leverage is real but modest, and it improves markedly if you can show a written offer from a competitor.
Compare the total remaining cost of your current loan, meaning all future payments, against the total cost of the new loan plus every fee involved in switching. Comparing monthly payments alone is misleading, because a lower payment achieved by extending the term usually costs more overall.
See how French mortgage rates are set for what drives the market, and the glossary for the terms used in refinancing paperwork.