Get the lowest rate: this is the workhorse of all borrowers taking out a home loan. And we understand them! Credit is expensive and it’s almost for life. Having to mobilize a sum every month for 15, 20 or even 30 years, as much as it is the lowest possible. To take advantage of this advantage, you still need to know how to negotiate your loan right from the start. Here’s how to go about it.
The thorny question of personal contribution
It is surely the most recurrent subject related to the mortgage. The personal contribution is in a way the precious sesame to obtain its attractive rate loan. Strictly speaking, it is not obligatory. However, difficult or impossible to benefit from a loan without this personal financial contribution of the borrower. Normally, it represents 10% of the price of the property and will be used to pay the notary fees to a minimum. Only downside: for some people including young people, it is complicated to present this contribution, lack of sufficient savings. All is not lost, because there are other sources to finance the contribution. Among them are the zero interest loans, the local loan negotiated, the loan Action Housing, and a loan from a relative.
A neat profile
One thing is certain: a risk profile client is unlikely to access the loan. At worst, he may have it, but at a high rate. The bank must compensate for the risk by applying high tariffs. It is, therefore, more than crucial to present a favorable profile. Already, the employment situation and income must be as stable as possible. Obviously, the CDI will gain privileges than the CDD or the interims. The banks will review the seniority, evolution capacity, and age of the borrower. In this regard, it is better to start taking out a mortgage when you are still young. It is wiser to finish paying back before retirement.
Sound management of your finances
Banks are intractable about this. They will refuse to give an advantageous credit to a person who is too expensive and who does not know how to manage his finances properly. Since the risk factor is high, they will necessarily apply a high-interest rate in return. To avoid this, bank overdrafts, payment incidents, excessive consumer credits and superfluous expenses beyond one’s means are to be banned. In any case, it will be difficult to hide from the lender the bad financial behavior, because it will decrypt the bank statements of the borrower.
An acceptable debt ratio
We can not emphasize this enough. The borrower must forget the idea of having a real estate loan if in parallel; he has already indebted by subscribing to several consumer loans that have increased its debt ratio. The tolerable threshold is 33%. Beyond that, it is advisable to first pay off all its consumer loans to reduce this debt ratio before considering a mortgage.
A short term mortgage
Another card that can play in favor of a borrower is to reduce the repayment term of the credit. It is accepted that the longer a loan is, the more expensive it will be. This long duration results in a higher rate. Loans of 25 to 30 years are therefore strongly discouraged. Not only are the interests booming, but insurance costs are becoming more expensive.