Mortgages: Tips & Tools to understand everything
The mortgage is a loan that consists of granting the borrower the necessary capital (in whole or in part) for the acquisition or construction of real estate.
The loan applicant will then have to repay the credit by paying monthly installments to the credit institution during the period determined by the contract. Insurance, file and interest charges are added to the capital.
The borrower can also subscribe to this type of loan for upgrades to thermal standards or for renovation work, especially if the amount borrowed is greater than 140,000 euros.
Otherwise, it will be a credit conso. In exchange for the granting of the mortgage loan, the lending institution may require a bond, a mortgage or various guarantees.
Types of real estate loans
It is not always easy to find the ideal credit according to one’s situation. For this reason, it is often recommended to compare different credits and organizations.
Do not hesitate to make one on our platform. It is also important to learn about the benefits and terms of each home loan.
The classic home loan
Still called the amortising credit, it is available without any means test in all banking networks. It is also adjustable over a period of 5 to 35 years at variable or fixed rate.
Simple and not very constraining, this loan makes it possible to finance the purchase of a land, the purchase of a new or old property, the renovation of a property and the acquisition of a secondary or principal residence.
It allows a loan seeker who wishes to resell a property to buy a new one, to acquire the property immediately.
It can therefore be defined as a cash advance made by the lending institution. However, there are several types of bridge loan, namely:
- the dry relay credit: it intervenes when the value of the real estate to be acquired is inferior or equal to that of the good which must be resold;
- the “backed-up” or “associate” bridge loan: when the amount of the bridge loan is not sufficient to finance the acquisition of the new property;
- the bridge loan with full deductible: here the credit is granted for a period of 24 months during which the borrower will not be required to pay interest on the loan for the first 12 months;
- the integrated bridge loan: this formula is suitable for borrowers who want to avoid the inconvenience of a potential difficult sale of their property.
The multi-level loan
It collects all mortgages, aided, subsidized or conventional loans that a loan applicant should apply for the acquisition of real estate, in order to benefit from an identical monthly payment for the duration of the loan.
This allows him to make significant savings on the interest to be repaid.
The loan in fine
It is particularly suitable for investors who have opted for the purchase of rental housing. It offers a higher interest rate rebate, while giving the loan applicant the opportunity to reduce its borrowing interest by paying taxes, while putting its capital at a good rate of return for the duration of the loan. borrowing.
The types of rates
The interest rate of a mortgage has important consequences on the total amount of credit. The loan applicant must therefore pay close attention to the rate that is submitted to him before subscribing to an offer. We have in particular:
- the fixed rate: here, the interest rate remains unchanged throughout the loan;
- the variable or revisable rate: this rate evolves according to a reference index (interbank rate of the euro zone). The frequency of this revision is stipulated in the loan offer and the revision can be done downwards as well as upwards;
- the nominal rate: this is the gross interest rate which does not take into account the additional costs of obtaining the loan;
- the APR (annual percentage rate of charge): mentioned in the offer, it takes into account all the costs conditioned by obtaining the credit;
- TAEA (effective annual rate of insurance): mentioned in a mandatory manner in all pre-contractual documents, it informs the applicant of loans on the amount of insurance offered by the lending institution within the limits of the offer of real estate credit.
Assisted / complementary loans
These are the supplementary loans granted by certain specialized structures or the State to make access to property easier.
There are several, each offering fairly advantageous financial conditions:
- the PTZ + (zero rate loan plus): repayable real estate loan without interest, this loan is conditional on obtaining a complementary classic home loan;
- the PEL (home savings plan): this scheme allows you to benefit from a credit at a fixed rate determined in advance, after a savings period of 4 to 10 years;
- the loan agreement: it is proposed without personal contribution and without means test, and allows the loan applicant to acquire housing while entitling the APL (personalized housing assistance);
- the CEL (home savings account): it allows the borrower to benefit from a preferential loan to finance work (energy saving or home improvement) or the acquisition of a housing;
- PAL (housing equity loan): this credit is only available to employees in the private sector (companies with more than 10 employees);
- the eco-PTZ: this credit does not have interest rates and allows conditionally, to finance energy work;
- the official loan: as the name suggests, this type of loan is intended only for civil servants and is granted by Crédit Foncier de France for the construction or acquisition of new or old property;
Repayment of a mortgage
The loan applicant agrees to repay his mortgage according to the terms of the contract.
The classic home loan with monthly repayment of a portion of the capital happens to be the most common. The monthly payment usually consists of the amortization of the sum borrowed, the death and disability insurance contribution and the interest calculated on the amount remaining due.
During the first years of repayment of the mortgage, the share of the repaid capital is lower than that of interest. It is the reverse end of credit. The loan applicant has the opportunity to make an early repayment of his mortgage.
This may be a partial or full repayment of the loan. If this is contemplated in the credit agreement, the lending institution may claim an advance refund payment.
The amount of these indemnities is obligatorily limited to 3% of the funds remaining due before the repayment, except if the prepayment follows the sale of the property in certain particular circumstances.
A partial prepayment allows the borrower to reduce the term of the loan or reduce the cost of the monthly payments remaining due.
Evolution of the interest rate
This rate varies according to the banking organizations. Indeed, it is fixed according to several criteria namely:
- the duration of the mortgage (repayment period given to the borrower);
- repayment capacity of the loan applicant;
- the subscriber’s debt ratio;
- the “market rates”: these are the key rates established by the ECB (European Central Bank) and applied to credits taken out by commercial banks with it. The higher they are, the higher the mortgage amount.
How to build the records of a mortgage?
It is strongly recommended to build a complete file before going to the banks to find the appropriate mortgage. In general, the following parts will be required:
- the last 2 tax notices;
- the last 3 bank statements;
- a proof of current domicile;
- the sales agreement if you already have it in your possession;
- the last 3 payslips;
- proof of identity.
These documents will allow the banker to establish a rate in line with your lifestyle and your needs.
Compare the offers
The mortgage market is very large. It is not always easy to find the ideal loan. To do this, you can either contact a maximum of bankers, to get an idea of the rates and choose the one that suits you best, compare online offers in the comfort of your home.
Our comparator allows you to compare various mortgage offers to find the one that suits you best.
You can also request the services of a mortgage broker who will take care of the steps for you from banking organizations.
And the legislation in all this?
Subscription to a mortgage is subject to very strict legislation that aims to protect the subscriber.
Numerous laws regulate repayment terms, the terms of the credit offer or the information of the investor.
One example is the Alur law, which allows first-time buyers to benefit from an extension of the period during which the repayment of a PTZ can be deferred.