- Step 1: Determine your repayment capacity
- Step 2: Determine the maximum amount of the mortgage
- Step 3: Apply for a mortgage
- Step 4: Identify mortgage fees
The mortgage is a cash advance without a specific destination in exchange for a mortgage of a property you own.
The TEG of a mortgage loan is more interesting than if there was no guarantee contribution. Contrary to what one might think, the banks and credit companies do not launch without thinking in this type of financing, the borrower must therefore be prepared. Check your home loan rates today.
Here’s how to get a mortgage.
Good to know: granting unconditional mortgages is risky for the economy. This is particularly what caused the collapse of “subprime” in the United States in 2007.
1 Determine your repayment capacity
Even for a mortgage, the borrower will have to prove that he can meet his repayments without difficulty, which means a debt ratio of less than 33%.
Add up all your current monthly payments: real estate credit and consumer credit.
Total the net taxable income of the tax household.
Divide the total monthly payments by the income. The result is the debt ratio. If it is below 33%, the difference can be used to add new deadlines.
Example : let’s take income of 4,500 €, a consumer loan for 300 € monthly payments and a mortgage with 900 € maturities, giving a total of 1,200 € monthly payments. The debt ratio is therefore 27% (€ 1,200 / € 4,500 = 0.266 or 27%). There is still room for 8% of indebtedness, or 360 € per month (8% x 4500 € = 360 €).
Determine the maximum amount of the mortgage loan
Banks and credit companies will only commit up to 80% of the market value of the property minus the capital remaining due.
To calculate the maximum amount of your mortgage:
Make estimate your property by a real estate agency or a notary.
On your amortization table for home loan rates today, see the “outstanding principal” column on the last due date.
Do the following operation:
Example : a house estimated at 250 000 €, on which there is still 150 000 € to pay can support a mortgage of 80 000 €, because (250 000 € – 150 000 €) x 80% = 80 000 €.
3 Apply for a mortgage
Once you are able to provide a mortgage guarantee, it is better to go to a bank: it will offer a better TEG than a credit company .
Present the following documents:
- the certificate of ownership;
- the estimate of the value established by a real estate agency;
- the mortgage credit agreement;
- the amortization table for home loan rates today;
- the statement of your bank accounts for the last 6 months;
- your last 3 payslips;
- your last tax notice or income tax return if available;
- the copy of the marriage contract or PACS for couples under the separation of property regime.
- Identify mortgage fees
- At the amount you need, you must add:
- of brokerage fees negotiable, ranging from 3 to 7% of the loan amount;
- processing fees , of the order of 1% of the home loan rates today;
- a second-ranking guarantee fee , due to the subscription of a new guarantee.
Note : When the mortgage on the property is still running, it will be preferable to guarantee the mortgage with a second-ranking guarantee of the IPPD type (subscription to the lien of money lenders), which avoids having to cancel the first guarantee and allows the creditor to be served second in case of default on the part of the borrower.