What documents should be collected?
Your loan file should include your last three bank statements, your identity document, your last three tax notices, your last three payroll statements if you’re an employee (sometimes your employment contract) or, if you’re independent, your last three balance sheets. If you already have current credits, you will also be required to provide an amortization schedule. “The bank also requires you to justify your personal contribution. If it is a life insurance contract, a certificate will be required to prove its existence. If you purchased through a donation, a copy of the contract is necessary, etc.”says Sandrine Allonier, director of studies at Vousfinancer.
What deadlines should you expect?
The chosen bank will give you an answer in principle within a week or two. After three weeks to a month, you will receive the loan offer, which you can send only after the mandatory eleven-day cool-down period has passed. “Select the date of receipt on the offer, and return it signed D + 11. For example, if you received the loan offer on April 1, you should not return it before April 12”Explains Maël Bernier, a mortgage expert.
Mortgage Credit: Look at the APR!
For the same term, the price with the lowest nominal rate is not necessarily the cheapest, because you also have to take into account the administrative costs, the cost of the borrower’s insurance and guarantees. This is why the loan offer should indicate the APR (Annual Percentage Rate). This price includes all fees charged by the bank. This is the true indicator of the cost of credit.
How long to borrow?
For the same amount borrowed, the monthly payment will be lower as the loan term will be long. But… the longer the term of the loan, the more expensive it is as interest is calculated on the principal outstanding, which then decreases more slowly. So you must find the right balance between the monthly payment that matches your budget and the total cost of credit. Since interest rates are low, buyers tend to extend the term as much as possible. However, banks do not exceed 25 years, or sometimes 27 years in the case of construction.
What are the guarantees to be provided?
The bank needs to protect itself from the risk of non-payment (if one day you do not have the means of payment). That is why it asks for a deposit provided by a specialized organization, most often Crédit Logement. Cost: a few thousand euros in the beginning, 2,800 euros in Crédit Logement for a loan of 220,000 euros for example… But, if you pay off your loan without incident, a part of the amount (about 1,000 euros) will be refunded to you at the end.
If this guarantee is refused, due to a professional situation considered too uncertain, for example, some banks do not grant the loan.Others agree to replace it with a home equity mortgage, or lender lien, a lower-cost type of mortgage intended for loans that finance buyouts and non-working.”says Mile Bernier.
Is the borrower’s insurance compulsory?
Banks generally do not agree to lend without this insurance, which will make the monthly payments or principal in your stead if you die, become disabled, or temporarily unable to work. Premiums vary according to your age – they are often a little lower for younger borrowers – depending on whether you are a smoker or not, depending on your health, sometimes, etc. You can take it out from the bank that will offer you its contract or with an insurance institution. Nothing prevents you from first signing your contract and then changing it. This will now be possible at any time during the loan period, starting with June 1, 2022 for new home loans, and September 1, 2022 for borrowers who are already repaying their loan. The bank may reject insufficient collateral, but then it will have to prepare a list of missing collateral.
File fees can be submitted.
Expert opinion of Sandrine Allonier, Director of Studies at Vousfinancer.
The loan rate is better negotiated with a good file (personal contribution greater than 10% of the project amount, savings available after purchase, etc.). Sometimes, without it being possible to write, having bank insurance helps the borrower to get 0.10%. Also discuss the application fee. It sometimes represents up to 1% of the amount borrowed, but it can be reduced to 300 or 400 euros, or even zero in some banks, because you get home insurance or a remote monitoring contract for your home, for example. It is difficult to negotiate prepaid compensation. Banks never agree to remove them in the event of a loan repurchase (when repaying to re-borrow at a cheaper rate). But it is restricted by law to a maximum of 6 months of interest. Or, more often, a few hundred euros, given the low level of interest rates.
What are medical procedures?
You will soon be less methodical than in the past. As of June 1, 2022, it is not possible to actually request a medical questionnaire for loans of less than €200,000 per insured borrower. (for example, €400,000 for a married couple insured at 50% per head) which expires before the borrower turns 60.
For other credits, a medical questionnaire must be completed, and additional examinations may be requested to help the insurance company assess risk, adjust the premium amount if necessary, or decline insurance. However, the principle of the right to be forgotten makes it possible not to declare a cancer whose treatment has been completed for five years (compared to ten years before repair).
What other features to look for?
Some loans are flexible. They allow you, during repayment, to reduce your monthly payment, for example, in case of financial anxiety, which extends the repayment period (1 year, maximum 2 years). It will also be possible to increase it for faster repayment. Sometimes, it is possible, for a month or more, to not make the monthly payment (credit suspension). Unpaid installments are deferred until the end of the loan, and its term is extended accordingly.
What is the contract with the lender bank?
No bank can ask you to localize your income with them, Even in exchange for a lower interest rate on the loan. But she will try…and will often be more conciliatory if she agrees to take car or home insurance with her. As far as you choose a banking institution that suits you (location, schedules, rates, etc.).