Rate renegotiation
A process aimed at obtaining a reduction in the interest rate on an existing loan from the current bank, without changing institution. It avoids the release fees and early repayment charges of an external refinancing, but the savings achieved are often smaller as the bank faces no competition. The broker can act as negotiator with the current bank or recommend external refinancing if the rate gap justifies it.
Key points
- It avoids the release fees and early repayment charges of external refinancing.
- The saving is often more limited as the bank faces no competition.
- The bank may agree to an amendment changing the rate, the term, or both.
- The broker can act as a third-party negotiator to strengthen the borrower's position.
Frequently asked questions
How should a borrower approach their bank to renegotiate their rate?
The borrower should come with concrete comparative data: offers from other banks or a broker simulation showing what they would obtain by switching institutions. The bank will be more willing to make an effort if the client is a good payer and the bank faces a real risk of losing the loan. The broker can formalise the request and present the figures to make the approach credible.
Why are the savings from renegotiation often smaller than those from external refinancing?
Because the bank knows the borrower will avoid release fees and early repayment charges by staying, which reduces the borrower's negotiating leverage. Without real competition, the bank may grant a minimal concession sufficient to retain the client without matching the best market rates. The broker can address this by simultaneously submitting a file to other institutions.
When is it better to renegotiate than to refinance externally?
Renegotiation is preferable when the outstanding balance is small (early repayment charges and release fees would represent a disproportionate share of the saving), when the remaining term is short (few future interest payments to save), or when the current bank spontaneously offers a significant concession. For large balances and a long remaining term, external refinancing is often more advantageous despite its costs.
In practice
A borrower still owes €90,000 at 4.10% over 8 years. Their broker shows that external refinancing would generate €2,800 in costs for a monthly saving of €45, a payback of 62 months. Renegotiating with their bank at 3.60% yields a €35 monthly gain with no costs, the preferable option here.
Official sources
- Article L313-39 of the Consumer Code · Légifrance
- Obtaining a mortgage loan · Service-Public.gouv.fr
- Mortgage credit (official guide) · Service-Public.gouv.fr