Rates have been falling steadily since the beginning of the year, reaching record highs. Study obtains in June rates at 0.85% over 10 years, 1% over 15 years and 1.18% over 20 years. These are simply the lowest rates observed. If you want to buy, it’s time to borrow! Lonigan Studs gives you some tips on how to present your mortgage to a bank or broker.
1) Conditions precedent
At the signing of a sales agreement, the buyer has a legal period of 45 days to justify the seller obtaining his mortgage. We must not waste time because after this period, the buyer may be forced to pay penalties to the seller especially in case of refusal of loan. Many banks refuse to take a case study if this time is up.
2) Debt capacity
This is the best-known rule of borrowers is that of the “33%”. The debt ratio varies from one bank to another depending on the records, but in general, the amount of the loan should not exceed one third of the net income of the borrower. This is the percentage of total loan expenses (all credits: consumption, revolving, real estate) compared to the net income of borrowers. If the banks have been accommodating in the past, the rule is now strictly enforced. Before signing a sales agreement, evaluate your borrowing capacity. This will allow you to direct your search for good in the price range corresponding to your purchasing power. For income of 3000 €, the maximum monthly payment is 1000 € which allows to borrow 164 054 € over 15 years, 209 222 € over 20 years and 244 259 € over 25 years.
3) The personal contribution
Ideally, you make a contribution to finance notary fees, fees (with the offer Study banking fees and brokerage are offered to you *) and guarantee. Indeed, fewer and fewer banks are willing to finance loan files without personal support. As a general rule, the borrower must contribute 10% of the amount he borrows. Depending on the institutions and the files, this rate varies, and some banks ask that their client has a minimum of 20% contribution. It is recommended to keep precautionary savings to cope with unforeseen but frequent expenses during a real estate purchase (heating, works …) and not to invest all its availabilities in the personal contribution.
4) The professional situation
Highlight your strengths. For example, if you do not have large incomes or your financial income is irregular, in this case, emphasize your young age, your professional potential, the stability of your additional income, seniority with your employer or a decline of your fixed charges in the coming years. If you have to retire before the end of the loan, anticipate a decline in your income.
5) Account management
The bank carefully studies the financial situation of each borrower. It is advisable not to be exposed in the three preceding the application for credit and, as far as possible to repay the consumer credit. Follow your accounts regularly and set your budget. In the event of a payment incident, delay your loan application by several months in order to provide the bank with solid statements of account. 6) Savings capacity The bank will be sensitive to your savings capacity. A monthly savings package will reassure the banker of your ability to cope with some financial pressure. She will prefer a client with low incomes but with an ability to save rather than a high-income client but no savings effort. It is best to delay a few months loan application, the time to improve your financial situation.
7) Place of purchase
The more dynamic the real estate market where you buy, the higher the chances of selling your property quickly and under good conditions. You do not necessarily think when you buy but your bank, it pays attention. There is no rule in finding a property, but there are many methods to find it. Either the future buyer does his research alone (websites, ads magazines, sales between individuals …), or he goes through a notary (auctions, specialized sites of notarial ads …) or by a real estate agent. To help individuals to know the real estate market, notaries offer various tools and statistics on real estate prices, particularly in Ile-de-France.
8) The duration of the loan
The risk that the bank takes increases with the duration of the loan it grants. It is well seen to reduce as much as possible the duration of his loan within the limit of his indebtedness. A solution all the more interesting that this reduction in duration can be accompanied by a rate cut. In this case, the repayment term will be shorter or your repayment monthly will be lower. Therefore, this will greatly reduce the total cost of your credit.
9) The real estate loan broker
For banks, brokerage is a stream of new qualified customers. The loan files are previously checked, assembled and correspond to the desired profiles. The banker only has to accept the file or refuse it. For the customer, it will be easier for banks to offer advantageous rates to broker networks because of the large business volumes they generate. The mortgage broker knows how to present a file to the banks, whereas a client alone does not necessarily know how to do it.