Mortgage Credit: Should You Mobilize All Your Savings Or Borrow As Much As Possible?

With rising mortgage rates, the question arises of the term and amount of the loan. Should envelope credit be reduced by releasing all one’s savings? I’m not sure.

If you are a poker fan, then everything has no secrets for you. But when it comes to mortgage credit, what is the strategy to follow? Do you put all your savings on the table to borrow as little as possible or, conversely, to borrow as much as possible? The question worth asking, Especially during this time of rising real estate prices.

For Mal Bernier, spokesperson for broker Meilleurtaux, the answer is clear: The truth is that Borrowing rates, even if they rise to about 2%, remain very low With much stronger inflation, so borrowing as much as possible remains the most attractive option. A vision shared by Pierre Chabon, co-founder of broker Brito: Despite the increase, if we look at the long-term, the prices remain very attractive today.

Real interest rates are still negative

While the interest rates on home loans are fixed, the interest rates on our savings products change with inflation. Calculated 5.9% over 12 months in June according to INSEE, the latter affecting many households but also your savings. At the moment, global savings yields have not yet increased, but Logically they will advance in August, supported by Pierre Chabon. If we compare mortgage rates with the return on savings, it is usually more interesting to borrow as much as possible. Real interest rates remain negative.

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Therefore, the rule is always to put as little personal savings as possible. In fact, many people today are alike They were forced to dip into their savingsEither because their ability to borrow has fallen as interest rates have risen, or because the project is otherwise unviable, Bernier’s money is bothering.

An obligation that has been complied with since the application of the new standards that impose, except for an exception, A debt ratio of not more than 35% for a maximum period of 25 years. Some borrowers are forced to put more so that the monthly payment is not too high. If we notice an increase in the personal contribution in recent years, it is not because the banks demand it but to reduce this limit by 35%, assures Pierre Chabon.

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Limit your personal contribution

On the other hand, those who have a choice are advised not to exceed a certain threshold. If the majority of borrowers wanting to purchase their main residence must come in with a personal contribution of 10% to cover additional costs (application fees, notary fees, etc.), then adding more is a good idea. There are banks that will offer a bonus rate If the borrower appears with a filing fee of 10% plus 10% of the property valueasks Pierre Chabon. Realizing up to 20% of the value of the property can be interesting, but after that, the price does not change much.

So it would be better to keep your money for an impromptu account such as a boiler change, work or for a future real estate project: keeping savings is Possibility to make a contribution for a rental investment, recalls the co-founder of Britto. Putting too much on your first real estate project would be a shame, it could keep you from doing a second.

Whatever your decision, you will be required to keep savings as a precaution against a severe blow. It is therefore advisable to allocate the equivalent of three months’ salary, on booklet A for example, where the funds are easily opened.

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