Are you aiming to become a homeowner? The realization of your real estate project will necessarily go through obtaining your mortgage. Arm yourself with patience because getting a mortgage to finance your purchase is sometimes quite an adventure, and even a source of stress for some buyers. We reveal all the steps to follow to calmly conduct your mortgage search: from calculating your budget to your bank’s credit offer.
What are the steps to obtain a mortgage?What are the steps to obtain a mortgage?
Step 1: Calculate your purchase budget
Obtaining a mortgage is in the majority of real estate acquisitions an essential step. Whether it is to buy your main residence, make a rental investment or acquire a second home , you must take out a mortgage to finance your real estate project. And this, even if you have significant savings. Several steps follow each other to obtain a mortgage, and the first step is to calculate your budget well with regard to various parameters related to your income and your personal contribution .
The debt ratio
Banks will establish your borrowing capacity based on your debt ratio, your expenses and your savings . The general rule sets the debt ratio at 33% . Based on the analysis of your income and expenses, your bank will calculate your maximum borrowing capacity , in other words, the maximum amount that will be granted to you for your loan.
The amount of your home loan also depends on factors such as the interest rate and the duration of your credit. According to data from the Crédit Logement/CSA Observatory of January 2021, the average duration of mortgages in France is 18 years and 11 months . However, the share of loans over 20 years remains the majority. With regard to the average interest rate for mortgages in France , it stood at a level that has never been so low in the second quarter of 2021: 1.06% .
The personal contribution
Your savings will therefore allow you to build up your personal contribution, which is added to the envelope granted to you by your bank and then gives you your overall purchase budget. It is by doing a few simulations that you will be able to target your apartment or house searches according to the right budget.
Don’t forget to factor in notary fees , also known as acquisition fees, into your calculation. These represent between 2 and 8% of the purchase price of your home, and are generally financed by your personal contribution . This is why your personal contribution must generally correspond to 10% of the purchase price .
Step 2: Find out from the banks and about the agreement in principle
Another important step is to make sure that your bank can follow you in your real estate project. By requesting an appointment with your adviser or by contacting a real estate broker , you will have a more precise idea of the conditions to be fulfilled in order to obtain a loan. These professionals will give you valuable advice for setting up your mortgage file , and can inform you about your eligibility for subsidized loans such as the zero-rate loan ( PTZ ).
At this stage of your project, it is better to avoid splurges and keep your bank accounts in the green because bank overdrafts are sometimes grounds for refusing a loan .
Another important element: your professional situation. A parameter that can have an impact on obtaining your credit . Stability in a job reduces the risk taken by the banker to finance you, which is why profiles on permanent contracts are more likely to obtain a positive response.
The bank’s agreement in principle
When you apply for a home loan, the bank can provide you with a financing agreement in principle with the terms of your loan (interest rates, insurance, etc.). The bank’s agreement in principle is not a contractual commitment, but this document aims to reassure sellers who prefer a borrower profile with an agreement in principle from their bank.
Step 3: Signing your sales agreement
You have defined your purchase budget and you now know that your banker can follow you. You can therefore begin your apartment or house search phase . Once the property of your dreams has been found, the signing of your sales agreement marks a new stage in your property purchase project. The sales agreement generally includes many conditions precedent, in particular one concerning obtaining your mortgage. If you don’t get your credit, the sale can’t be finalized. Your bank will therefore base itself on the compromise, and therefore the purchase price of the accommodation, to establish its loan offer. The condition precedent for obtaining credit is generally 45 days.
Step 4: Compare banks
Feel free to compare banks online on brokerage sites or by going to appointments at different banks. This will help you negotiate and get a better rate ! Several criteria favor obtaining a better rate, such as having a significant personal contribution or presenting high incomes . In addition, this step of analyzing banking establishments can help you if your bank does not wish to finance your mortgage.