Entering a real estate loan
Entering a real estate loan to finance the purchase of wealth is now a common practice in modern society. All those who plan to build a house or acquire a home resort to this process. It has become more democratic since the fall in mortgage interest rates. For good reason, borrowers are scrambling to submit a mortgage application to banks and specialized agencies. This is a good time because rates have never recorded such levels in history. It is true that the situation could change soon. In the meantime, this remains a great opportunity for households wishing to become homeowners.
Real estate loan offers abound in the real estate market. First, the simple reason that real estate is a safe bet in the long term, justifies the adage. For good reason, the acquisition of real estate is gaining ground everywhere. The acquirer may have set aside money to lower the loan amount. We will then talk about a home loan with personal contribution. This is an essential asset to educate a solid case, because it helps to reassure banks, and therefore, to obtain a loan faster with more advantageous interest rates.
The regulation of the real estate loan
Framed by law, the mortgage agreement is governed by a specific legal process. The new regime focuses on protecting borrowers, as opposed to banking professionals themselves. In fact, all creditors and distributors of real estate credit or intermediaries are subject to the same obligations of professional competence. this provision will apply from March 19, 2019. These are four pre-contractual obligations, namely:
- the presentation of the lender,
- credit information by means of a standardized European or FISE information sheet, in force as from 1 January 2014 in France,
- the explanation or warning about the creditworthiness of the borrower
- compulsory counseling accompanied by written studies (left at the disposal of the client)
The different types of real estate loans
Real estate loans come in different aspects. The choice is up to the brokers. The major categories of real estate loan, benefit all conceivable needs.
The depreciable loan
- The most common is probably the amortizing loan . As the name suggests, this mortgage is regularly repaid by installments. Let us add a detail, by equal deadlines said still constant. this regularity will be monthly (most often) or quarterly. This loan offer exists at most banks and financial companies.
Ready with variations
- This conventional loan still contains sub-categories that are characterized by the type of rate, namely, the fixed-rate housing loan, the variable-rate housing loan or the adjustable-rate housing loan. This variation modifies my intention, because the periodicity may have remained constant, but its amount will be adjusted according to the formula adopted.
Variable rate loan
- A word on variable rate real estate loans (which were in effect during periods of falling interest rates). these variable rate mortgages found takers for several reasons. The first bank granted the possibility of prepaying this mortgage without penalty. In addition, the bank purchased its resource based on this shorter estimated duration. It was supplied on the money market in “euribor 3 months most often”.
Ready first time buyers
- For young people who have just landed in the world of work, the Youth Accession Loan was designed to help them finance their first primary residence.
flexible rate loan
- The adjustable rate mortgage is added to the list. Instead, it refers to monthly payments which can be revised upwards or downwards while the rate remains unchanged (see the contract) until the last deadline.
- In addition to this, it is possible to defer the payment. This is called flexible or deferred loan. In all these cases, the bank presents a new amortization table in accordance with the options taken.
Duration of the loan plus or minus two years
- Sometimes subscribers make partial prepayment. Finally, to conclude on this non-exhaustive presentation the mortgage can evolve in a range, considering the duration of more or less two years, according to the choices of the real estate borrower. This flexibility at a price of course, but the customer will adopt the formula of the mortgage, the most appropriate according to his needs.
Use the loan in fine to support a real estate project
Then there is the real estate loan in fine which is refundable at one time, at the end of the loan. Individuals who apply for this property credit of a particular type, decide most often to rent the housing purchased on credit, to pay the deadlines with the rent.
Operation of the thin loan
The real estate loan is non-depreciable, only interest is due. Thus, throughout the loan, the borrower only reimburses his loan interest. A single payment at the end of the term represents a major risk for lenders. To guard against these risks of non-payment, the contractor must succeed in demonstrating the stability of his financial situation. For its part, the lending bank will guarantee the credit by imposing the monthly payment of a predefined amount on a product it has chosen. It is generally granted for a period of between 3 to 12 years, so to speak that it extends over the medium term. There is no maximum ceiling for the loan in fine, therefore, the minimum amount granted is 21,500 euros.
The main uses of the real estate loan
To the knowledge of real estate credit, it is easier to check the good profile of the borrower. Analysis of the needs of the borrower, confirms the broker before presenting his study encrypted. Will my real estate loan be used to finance construction works or a direct purchase?
Why all these real estate loans?
It is good to know that home loans can also be used for other similar purposes. Thus, the purchase of building land for the construction of buildings. In short, it corresponds to all the real estate projects that you want to implement such as, real estate acquisition, renovation, expansion or earthworks, among others. In other words, this loan is ready for all uses related to real estate. However, to be able to borrow over a long period of time, you need a stable situation, preferably a contract of employment in fixed-term contracts. In addition, the minimum duration is 5 years on average and 30 years maximum. Some borrowers extend this period to 35 years for financial reasons, which represents a real financial suicide.