The mortgage is often essential to finance the purchase of a house, an apartment or a rental investment. How does a mortgage work? What are the criteria studied by the bank for following or not following a mortgage application? Answers.
The functioning of a mortgage
The mortgage is granted by a banking organization to an individual for an average duration of 19 years, according to figures published by the Observatoire Crédit in July 2019. This loan is intended to finance all or part of the acquisition of ‘a property, a construction operation or work on this property.
Several points characterize home loans: the presence or absence of a personal contribution, the amount borrowed, the repayment period, the guarantees, the credit rate, the borrower insurance rate and the administrative fees.
It is necessary to know the different criteria studied by the bank to validate your loan request. The type of credit requested is also very important. Indeed, it is necessary to differentiate the fixed-rate loan, the variable rate loan and the fixed-rate loan for example. If you do not know which type of loan to direct you, do not hesitate to call a professional.
The key steps to get a home loan
Have you found the property that suits you and all you have to do is finalize the financing? Here are the main steps to follow to obtain a mortgage.
The search for a mortgage
The first step is to find the best home loan. The competition between banks is essential to lower the cost of credit. This can be made easier by using an online comparator or by going through a broker who will do this work for you.
The assembly of the loan dossier
Once the loan offer selected, you will have to mount a complete financing file with several supporting documents and in particular: a valid identity document, a proof of address, your last three payslips, your last three notices taxation, etc. To reassure the bank, you can attach other documents such as those justifying your personal contribution, your investments and savings accounts, and those relating to your outstanding loans.
Receipt of the mortgage offer
The borrower generally receives the credit offered by registered mail one month before the final signature. The contract includes the general and specific conditions of the offer, the general conditions of the insurance and the surety company. This offer is valid for 30 days from receipt. A reflection period of 10 days applies in order to be able to sign the loan contract in the best conditions. You will not be charged any fees if you refuse the loan offer.
The signing of the mortgage contract
You must return the signed offer to the bank before its expiration date. This means that you accept the terms of the contract.
The release of funds
The bank only releases funds if the act of sale is signed within 4 months of accepting the loan offer. Otherwise, the offer may be canceled and the lender may apply fees. The funding is released a few days before the date of signing of the deed, in an account held by the notary. In general, a month later, you start paying off your first monthly payment.
What to do in case of mortgage refusal?
Several reasons can lead the bank to refuse your mortgage application: job insecurity, insufficient income, poor bookkeeping with too large overdrafts, for example, loan insurance with insufficient guarantees.
In the event of a refusal of a mortgage, several remedies exist to achieve the realization of your project. You can try your luck elsewhere by asking other banks. Indeed, for an identical file, the responses of banking organizations can vary greatly.
Another solution: lower your budget by moving away geographically or by reducing the desired area. You can also promote the desired property with the bank by highlighting its strengths and the added value you could achieve by buying it.
Finally, a broker can help you with your efforts. This professional is in contact with a large number of establishments and can negotiate the loan conditions.
The final solution is to postpone your real estate project for a few months in order to improve the file presented to the bank.
All our information is, by nature, generic. They do not take into account your personal situation and do not in any way constitute personalized recommendations with a view to carrying out transactions and cannot be assimilated to a financial investment advisory service, or to any incentive to buy or sell instruments. financial.