As you're no doubt aware, mortgage rates are on the rise. What's more, banks are becoming increasingly demanding when it comes to borrower profiles. The result? According to the broker Finance Conseil, 16% of loans are now refused.
After some intense years in terms of real estate transactions, we're now seeing a clear slowdown. In some sectors, there are even more sellers than buyers. Against this backdrop, banks are increasingly reluctant to finance property purchases. The conditions for borrowing are no longer the same:
- The personal contribution (the little extra that used to make all the difference), which used to be 10%, is now 20%. It's hard to raise the necessary sum when you're just starting out in life...
- Rising interest ratescombined with inflation are eroding the solvency of potential borrowers, as their "living expenses" are falling. You now need a more than comfortable salary to be able to seduce your banker.
- As usury rates are not very high, this has an impact on the granting of loans. Remember that a loan is said to be "usurious" (and will therefore be refused) when it is granted at a total effective interest rate, or TAEG (including the cost of the credit itself and the cost of borrower's insurance, administrative fees, etc.), which exceeds the current usury rate.
In addition to these parameters, the usual criteria are always taken into account:
- Professional situation: it's always preferable to have a permanent contract to borrow.
- Whether you are a good manager in the eyes of your bank, and not chronically overdrawn.
- Whether you have other loans "on your back": consumer credit, other outstanding mortgages, etc.
What's new in the scrutiny of your situation: we now look at the location of the coveted property. Is it far from your work? Will you need to buy another car to get to and from work? Is it in good condition from an energy point of view, or does it need a lot of work?
As you can see, your banker needs to be reassured! And that's no easy task...
Stéphanie Swiklinski