First and foremost, you should assess your financing capacity with a professional (your banking advisor, a broker) before starting your search to save time and focus on properties that match your budget.
Do you wish to purchase a real estate property and need to take out a loan to realize your project? Here are some tips that might be very useful.
Logically, if one wants to maximize the chances of obtaining a mortgage, it is essential to present a complete file to the bank, meaning with all the necessary documents and proofs regarding one's civil status and income (ID card, proof of address, last three pay slips...).
Before the meeting with the bank, it might be wise to perform a mortgage simulation to have an idea of the amount you can borrow and your budget.
The bank will also seek to ensure that the borrower has adequate financial resources to repay the mortgage.
Therefore, it is essential not to have had overdrafts in the last six months, to have a stable professional situation, not to accumulate consumer credits, and to have a personal contribution representing at least 10% of the borrowed sum to cover your purchase costs, especially notary fees.
The larger the down payment, the more the bank will be willing to offer a favorable loan. Finally, the borrower's debt ratio should not exceed 35% for the bank to grant the loan.
The borrower is not obliged to take out a mortgage with their current bank. They can compare borrowing conditions offered by different institutions. This will enable them to find the most favorable credit offer based on their profile and needs.
Comparing offers from different banks is highly recommended since the criteria for granting a loan and the borrowing conditions vary between lenders. The borrower could potentially make significant savings.
They can inquire about the offers from generalist banking institutions, which, due to their significant financial power, can afford flexibility and may offer very attractive deals depending on their current business strategy.
Mortgage insurance delegation means taking out loan insurance with a company other than the lending bank. Indeed, the borrower is not forced to subscribe to loan insurance with the bank that granted them the mortgage.
They can inquire about offers from other institutions and subscribe with the one of their choice. Delegation allows the borrower to turn to an institution offering guarantees suited to their profile and to obtain the best possible rate for their insurance. However, the lending bank must approve the contract chosen by the borrower.
The bank may refuse it if it offers a lower level of guarantee than the one it itself offered to the borrower. If the borrower wishes to opt for insurance delegation, their lending bank must provide them with a synthetic sheet summarizing its insurance requirements.
Early Repayment Indemnities (ERI) are charged to the borrower by their lending bank when they wish to settle their mortgage ahead of time. There are two types: total early repayment, allowing the suspension of the remaining interest and insurance contributions, and partial early repayment, enabling the reduction of the loan term or monthly payment.
Early repayment represents a financial loss for the lending bank. That's why it applies fees to compensate. However, these early repayment fees can be negotiated at the time of the loan subscription, even though borrowers tend to overlook this. The borrower also has the option to request their complete cancellation or demand that they no longer apply after a period of repayment.
In the latter case, the contract must specify until when the ERIs are applicable. After this date, the borrower will have no additional fees to honor if they decide to repay their loan early.
Note: according to a study by Vousfinancer.com, the rate of mortgage refusals for the year 2020 reached 11.5% compared to 5.5% in 2019.
