Real estate credit, play your trump cards to borrow!

Present a good dossier

You need to make a good impression. That's the basis of everything. To do this, you need to show your best side and :

• demonstrate exemplary financial behavior. Banks like stability and security. So pay attention to your last three bank statements! They'll be able to analyze exactly how you manage your finances. A bank will prefer someone who manages his or her accounts well to someone with a high income, but who is unable to save or make ends meet.
• have a minimum personal deposit. This is the amount of money you have available immediately before applying for a loan. It's a decisive and "reassuring" factor for banks. They see it as your ability to put money aside and manage your budget properly. The greater the amount you have on hand before taking out a loan, the better the terms the bank will offer. The law does not set any minimum amount for a personal contribution. In practice, they generally require a minimum deposit of 10% of the purchase price.
• prepare a financing plan. This will give you a clear idea of where you stand financially, and enable you to negotiate with your banker, putting forward quantified arguments. This means that you'll first need to assess the savings you have (savings, proceeds from the sale of a property, etc.) and estimate your repayment capacity, i.e. how much of your budget you'll be able to devote each month to repaying your loan. According to the recommendations of the Haut Conseil de Stabilité Financière, your debt ratio must not exceed 33% of your income.
• present a project that is consistent with your financial capabilities and needs. There's no need to think too big, too atypical, too far away from everything... A well-located apartment, in or near a major city, will be more attractive than an old house deep in the woods requiring extensive work. A property that's easy to resell will be an additional asset to reassure the lending institution.

Direct debit of income

Since the 2019 law on business growth and transformation (Loi Pacte), banks can no longer require borrowers to transfer their salaries to their establishments when granting a home loan. Income domiciliation is now part of the arguments for putting banks in competition and negotiating loan conditions.

Put the banks in competition

With your file under your arm and your project in mind, all you have to do is knock on the doors of as many banks as possible. Don't limit yourself to your usual bank, where you already have your accounts. Contrary to what you might think, it won't necessarily be the bank that offers you the best loan conditions. In addition to the interest rate, it's the characteristics of the loan that should catch your attention. Each loan contract, and even each lending institution, will have its own specific features that may make all the difference.
That's why it's a good idea to compare :

• the APR(annual percentage rate of charge), which takes into account all the costs involved in taking out a loan (bank interest, application fees, cost ofcompulsory insurance, guarantee fees and any other charges imposed on you to obtain the loan)
• fixed-rate and adjustable-rate loan offers
• options and terms for increasing or decreasing monthly payments
• conditions for early repayment and the cost of this operation
• account management fees.

Compare insurance policies. While borrower's insurance is compulsory, you're free to choose your contract. Since the Lagarde (2008) and Hamon (2014) laws and the Bourquin amendment of January 2018, take advantage of insurance delegation. This option gives you greater latitude in choosing your insurer. You don't have to opt for the group contract offered by the bank granting you the loan. You are, however, required to respect the equivalence of guarantees. Remember that to determine the insurance premium, which accounts for 25-30% of the total cost of a mortgage, the contract takes into account three key criteria: the borrower's age, current and past state of health, and the amount of credit borrowed. So it's a good idea to negotiate and compare your loan insurance to reduce the cost of your mortgage.

Use the services of a broker

You don't have enough time to shop around. None of the proposals made by the banks suits you. However, your cause is not lost. Knock on the door of a broker. His assets: a perfect command of the banks' commercial policies and full support until your file is complete! He'll save you time and money. He'll negotiate a loan for you on attractive terms (rate, insurance delegation, financial package, reduction or elimination of prepayment penalties, etc.). He'll help you put together your financing package and find the right solution for you, both in terms of duration and type of loan.

Marie-Christine Ménoire