Smoothing out a mortgage and consumer credit: explanation and procedure


Having visibility on your finances and knowing exactly the amounts of credit you have to face in the months and years and to come, this is what allows you to manage your budget on a daily basis with confidence.

Credit smoothing allows you to obtain maturities of a fixed amount over a fixed period, including if you have both a home loan and one or more consumer loans (work, vehicle, etc.).

What is real estate and consumer credit smoothing? Is it interesting to use this technique? How to smooth your credits? We take a look at your questions.

What is credit smoothing?

Credit smoothing is an operation set up by a financial institution so that the monthly payments of your different loans are one and exactly the same throughout the repayment period.

The smoothing technique is quite common in real estate loans, where the banker will include, for example, a PTZ (zero interest loan) and a classic mortgage to smooth your monthly payments. In practice, you will repay the same amount each month.

Example of smoothing for mortgages

You borrow 100,000 euros with a classic mortgage over 20 years and 20,000 euros with a PTZ over 10 years. To smooth the monthly payments, your maturities will be modulated between the different credits.

Thus, during the first ten years, your maturities will integrate the PTZ and the classic loan in a small proportion. The following ten years, the PTZ will be repaid and you will only pay the classic loan. But your monthly payments will be unchanged.

Example of smoothing with mortgage and consumer credit

You have an outstanding loan for a new vehicle and monthly payments of 200 euros per month. You now want to acquire your main residence, but your borrowing capacity is 800 euros per month with a debt ratio of 33%.

Thanks to the smoothing, you will pay, as long as the car loan is in progress, 200 euros for your vehicle and 600 euros for your main residence, for a total of 800 euros. When the car loan is settled, your mortgage loan maturities will drop to 800 euros per month.

What is the difference between loan smoothing and tiered loan?

You may have heard of a tier loan before. For the underwriter of the loans, the result is the same, although for the bank, it is totally different.

Unlike the smoothing that is done within the same financial institution, the tiered loan consists for bank B to delay the payment of your loan so that you can repay the current loan in bank A.

What is the difference between smoothing and repurchasing credit?

The loan by stages is generally refused by the banks, since they consent to a commercial gesture, while you still have a loan in progress in another establishment.

They will prefer to offer you a loan buyback, so that all your loans are grouped together in the same financial institution, regardless of their age and the outstanding capital.

Smoothing is therefore a possible financial technique if and only if your loans of any kind have been taken out in the same banking establishment.

Should we smooth out our consumer and mortgage loans?

When smoothing two loans that have a different purpose, you must bear in mind that you repay the interest first of all, without repaying the capital. In other words, you pay off your bank debts, but still don’t own your assets.

Some arrangements make it possible to repay both capital and interest. Nevertheless, they are not always more advantageous, since the bank adds interim interest which generates additional bank charges.

In the end, the smoothing of home loans with consumer loans is rarely interesting, even if a study does not commit to anything and sometimes reserves good surprises.

Our advice: prefer alternatives to straightening

Loan smoothing remains relevant in mortgage lending. However, when you have consumer loans and want to take out a mortgage, we recommend one of the following solutions instead:

  • Wait a few months and postpone your real estate project: between the search for a property, the signing of the compromise and the deed of sale, there are many months that you can use to repay your consumer credit maturities, or to save. This period allows you to settle your consumer loans before taking out a mortgage.
  • Use credit consolidation: preferred by banks, it is generally more advantageous than smoothing, especially if you already have a mortgage and want to obtain a consumer loan. In addition, mortgage rates are low and often profitable, so it is the right time to have recourse to the repurchase of credit

How to obtain the smoothing of mortgage and consumption?

If you want to do a study for smoothing your loans, you should make an appointment with your current bank. She will study the feasibility of your file and will be able to give you a new amortization table with your loan smoothing.

If this one is refused to you or does not suit you due to its high cost, do not hesitate to use a simulator for the credit consolidation this time. It will allow you to put the various financial players in competition to obtain an attractive loan repurchase offer with a fixed monthly payment!

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