Everyone agrees that there will be a before and an after to containment. If business gradually picks up again, home loans and their terms and conditions will be impacted. But with the right preparation and support, anything is possible.
Real estate credit
An encouraging diagnosis
The announcement of the deconfinement was like a breath of fresh air for many professionals and individuals alike. Home-ownership projects and the processing of loan applications had been put on hold for many weeks. The latent uncertainty caused by the health crisis and its repercussions on economic activity led to a slight upward trend in interest rates from the beginning of April.s the beginning of April (averaging between +0.15% and +0.30% depending on the institution), even though the rates applied were always favorable to borrowers. At the same time, banks noted a sharp drop in loan applications. However, the prospect of the deconfinement allowed real estate activity to pick up again. Credit institutions have gradually resumed their business. Depending on the situation, they are either processing existing applications or examining new ones. But with stricter lending conditions to anticipate and limit risks as much as possible.
Current credit and insurance
Loan insurance may include job loss cover. This covers all or part of your monthly payments in the event of unemployment. It's a good idea to check whether this coverage exists, if necessary by asking your banker. Please note, however, that job loss insurance policies have various waiting periods and numerous exclusion clauses.
Real estate credit
Appropriate processing of applications
Banks will undoubtedly be more attentive to the quality of borrowers' files. The conditions for granting home loans to certain households, particularly first-time buyers, could be stricter. So how can you make the most of this situation? Quite simply, by preparing a solid file that will inspire the confidence of lending institutions, which will apply even more strictly the recommendations issued at the beginning of the year by the French High Council for Financial Stability:
- a loan term not exceeding 25 years
- a debt ratio not exceeding 33% of income
- a stable financial and professional situation. Banks may be more attentive to the sector in which the borrower works
- impeccable account management (with few or no outstanding loans or overdrafts)
- the proportion of thedown payment in relation tothe value of the property
- available savings to cover any "hard times" that may arise once the purchase has been completed.
A final word of advice: now, perhaps more than ever, is the time to enlist the help of a broker, who will have the arguments you need to negotiate a loan on the best possible terms, and who will be able to find the bank likely to accept your application.
Marie-Christine MENOIRE