- First real estate loan: define your real estate budget
You start thinking about buying, but this is just the beginning of the queries. Now you have to calculate your real estate budget: the maximum price you can pay. For this you need to define your contribution and the amount you can borrow.
Create a personal contribution
The personal contribution is the amount of money you will have to pay from your pocket for the purchase. Generally banks ask to bring at least 10% of the price of the property, which corresponds to the notary and guarantee fees . In fact, the more you bring, the more your banker will be reassured – but this is not a reason to make funds drawer!
You will probably use your savings to make a contribution. If your money is placed on different financial products, empty those that do not affect your tax system. Choose an outflow of funds from PEE or your PERP than from your life insurance for example. If it’s possible, do not put all your savings into the contribution, because you have to pay attention to hidden fees and unexpected expenses.
If you are buying an apartment or house for the first time, your parents or grandparents may be willing to help you. In this case, two scenarios are possible, either they make you a loan, or they make you a donation. In both cases, check the formalities .
In addition, promoting access to property is a strong political will in France: the State and the local authorities are working in this direction. Many support schemes for people wishing to buy have been set up such as: Zero Rate Loan ( PTZ ), Social Accession Loan (PAS) or local loans.
Optimize your financing plan
Calculations to optimize your borrowing capacity can not be done head-on, and we can only recommend that you use the Pretto simulator that was designed for this purpose .
To calculate your borrowing capacity, you must know the maximum monthly payment that the bank will let you repay. This maximum monthly payment depends on your debt ratio, which is said to (much) simplify that it should not exceed 33%.
This debt ratio is one indicator among others, and not a strict and systematic criterion. If your financial situation is easy and stable, you can borrow beyond the limit of 33% without affecting the rate. But what will be the amount of your monthly payments and therefore their impact in your daily life?
The rest to live is another indicator for assessing the standard of living of a person or a household. This is the sum you have after the payment of your recurring expenses, and this over a month. In addition, the load jump calculates the difference between your charges before and after the credit.
To optimize your financing, duration is a variable on which you can also play. It depends on your age. Your loan must be fully repaid before blowing your 70th candle. On average, home loans are underwritten over 18 years, with a possible duration of between 5 and 30 years (in reality, they are often repaid before and last 7 years on average in France, because buyers resell). This leaves you the choice!
2. Go through a broker to make a mortgage
Brokers have better rates than banks
The broker is an interlocutor between you and the banks. Its job is to know the conditions of all the banks and to indicate to you the offer most adapted to your project. You save time, money and white hair.
The role of the broker is also to give you an expert opinion on your project and help you achieve it. He knows how to guide you beyond the simple real estate rate : the borrower insurance , the modularity, the exemption of prepayment, the guarantee are elements that will have an impact in a few years and on which you probably need to be advised today. He prepares your application for a mortgage.
There are different types of brokers governed by this regulation, and the quality of their service differs:
- Traditional brokers in an agency prepare in detail your file, but are paying (up to 3000 €) and only work with bank branches close to theirs.
- Linking sites are free, but do not prepare your loan file and do not negotiate your rate: they just make an appointment with a bank.
- Pretto brings together the best of both worlds: complete service up to 100% free online signature
Reduce costs with Pretto
Pretto is an online broker that makes the mortgage easy. Our mission is to find the best mortgage for you, for free and online. The peculiarities of Pretto? A team of experts accompanies the borrowers from A to Z: optimization of the financing plan, constitution and valuation of the file, personalized negotiation with the banks.
Because your time is precious, we are reactive and treat your file as quickly as possible. We also want the service we render to you to be transparent and with no commercial impact, because it is the service we would have liked to receive. We do not retain information, and are transparent about the progress of your file!
Here’s how Pretto works:
- Realize a mortgage simulation on app.pretto.fr and discover the rates of the banks for your project;
- Register and make an appointment with your Pretto advisor to refine your project and communicate your expectations;
- Submit your vouchers and your advisor analyzes your file;
- We negotiate with a large network of partner banks and you follow the progress of your loan application in your customer area. Our customers are satisfied Our greatest joy is to see the satisfaction of our customers when their project comes to an end. Find their opinions and comments on fr.trustpilot.com/review/pretto.fr .
Our loan simulator is easy to use and reliable in its answers. You will only have to answer a few questions to discover the property rates and conditions that we can obtain for your project. Then, our experts take over to refine and optimize your financing plan, but also study the parts of your file.
We do more than negotiate the interest rate: we hunt for expenses (insurance, guarantees, penalties in the event of early repayment, etc.). Pretto takes care of everything!
In order to prepare your project in advance, we advise you to register on Pretto as soon as you start your real estate searches and make a first appointment. You will make an important decision: an expert Pretto is here to guide you. He analyzes your project, answers your questions and accompanies you in your choices. !
3. Get the best mortgage
The operation of a mortgage is not very intuitive! Here are some explanations. Most of the real estate loans granted in France are called “amortissables”. Their duration varies theoretically from 5 to 30 years. How does it work ? Already, remember that you will pay interest and a portion of the capital at each monthly payment, but the share of one and the other evolve during the loan. Furthermore :
- Monthly payments are constant;
- Interest is proportional to the outstanding capital . They are therefore important at the beginning of the loan and decrease with time. Conversely, the share of capital repaid each month increases.
The interest rate, factor 1 of the cost of credit
It represents both the main cost in financing a real estate acquisition and the heart of bank mechanics. To meet your mortgage application, the bank sets an interest rate based on your profile and the nature of the loan. And the more your project is perceived as risky or unprofitable for the bank, the higher the interest rate will be. The interest paid corresponds to the interest rate multiplied by the capital remaining due. Compare rates !
The borrower insurance and the guarantee
You can not cut it, subscribe to a borrower insurance is required to obtain a home loan. And so much the better, since it guarantees the repayment of monthly payments in case of a hard blow. It’s even a great way to protect yourself and your family.
There are several possible levels of coverage, from the subsistence level to more comprehensive coverage. Death insurance is mandatory. It ensures repayment of the loan in case of death of one of the co-borrowers. It is coupled with one or more disability insurance. There are several types of contracts covering different degrees of disability (partial or total) and inability to work (temporary or irreversible). Insurance is an important part of the total cost of your real estate project, up to a third! In addition to the amount of the loan, other information is needed to determine the cost of a loan insurance: your health, your profession and your hobbies. Depending on the answers given, the insurer will suggest a formula adapted to your profile.
To protect themselves more against the risk of unpaid bills, banks require that the loan is also covered by a guarantee . It allows the repayment of the credit in case of default of payment outside the cases covered by the insurance.
Conditions related to the loan
The interest rate has a major impact on the total cost of your credit, but focusing exclusively on it would be a mistake. Loan conditions may affect the cost as of subscription or later in the life of the loan. Be careful!
This guarantee costs you about 1% of the loan amount. On average, a mortgage is paid back after seven years, so before the end of the term .
This is called early repayment. To compensate for the shortfall, the bank sometimes charges reimbursement fees . You can negotiate them, do not hesitate. Other conditions may be useful, such as the franchise , the modulation , the postponement of maturity or the transferability.