Sale of a home, inheritance, exceptional bonus… When unexpected capital arrives in your account, should you invest this money or use it to reduce your mortgage? Beyond the psychological comfort of freeing yourself from debt, the decision remains above all financial. And the answer is not always what you think.
Before making any decision, take out the calculator. Everything counts: the loan rate, the remaining term, the amount repaid and any penalties. These early repayment allowances (IRA) are capped by decree at the lower amount, between 6 months of interest calculated on the capital repaid in advance, and 3% of the capital remaining due (article R313-25 of the Consumer Code).
When credit costs more than your savings
Early repayment becomes attractive when the credit rate clearly exceeds the return on savings. This is particularly true for recent loans, around 3.5 to 4% since the end of 2023, while secure investments yield barely 2% net.
Example: you have 120,000 euros left to repay over 15 years at 3.50% and you have 40,000 euros. Placed at 2% for 15 years, this capital would earn approximately 13,800 euros in interest, taking into account compound interest. Used for early repayment, it would save up to 18,000 euros on credit, by reducing the duration rather than the monthly payments. A winning strategy of just over 4,000 euros compared to the investment.
Conversely, for a loan at 1% or 2%, very common between 2016 and 2021, it is more judicious to keep the credit and invest the capital. As for the zero-interest loan, there is obviously no financial interest in repaying it early, since there is no interest, apart from reducing the cost of borrower insurance.
The timing turns out to be just as decisive. At the start of the loan, interest weighs heavily. Repaying early in the loan maximizes savings, because interest represents the largest portion of the monthly payments at the beginning. Early repayment in the first third of the loan can generate several thousand euros in savings. On the other hand, in the last third, most of the interest having already been paid, the gain becomes limited and often lower than the amount of the IRAs.
A lever to finance a new project
In addition to direct savings on interest, repaying early can free up margin for new projects, such as a rental studio or second home. Objective: reduce your debt ratio to improve your borrowing capacity. For example, a couple earning 4,500 euros per month and repaying 1,500 euros is close to the debt limit of 35% of income. It is impossible, in these conditions, to borrow again. If he can reduce his monthly payments by 500 euros thanks to partial early repayment, his debt rate would fall to 22%, and he could therefore consider another mortgage loan in parallel.
Last point: the bank can refuse a partial reimbursement covering less than 10% of the initial capital (articles L313-47). In other words, there is no point in multiplying small requests each year, they would be refused or not very profitable.
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