Everything you need to know about real estate loans: bank, broker, insurance and rates
With this sum of money, you can finance the construction or acquisition of a building (housing or land) for residential or mixed use. Before signing anything, you should find out about the characteristics of the loans offered: rate, insurance, process, broker or bank? Let's clear up these points together!
The different types of interest rates
The Mortgage interest rate can be fixed or variable depending on the contracts. With a fixed interest rate, you get a long-term vision of your monthly payments to be repaid, which cannot vary. On the other hand, with a adjustable interest rate, the latter is calculated on a reference index. The evolution of this index (both up and down) then affects the amount of the monthly payment or the duration of the credit. With a capped interest rate, this means that the loan agreement provides for a limitation of the overall change in the interest rate.
Mandatory borrower insurance
One Real estate credit must also be accompanied by a borrower insurance : in fact, even if there is no legal obligation to subscribe to home loan insurance, all lenders require it. It is therefore essential to protect the bank or any other financing company against the risks of death, total and irreversible loss of autonomy (whether for the purchase of a main or secondary residence, or a rental investment).
How does an application for a mortgage take place?
Apply for a mortgage is very simple and the procedure takes place in several stages:
- Sign a sales agreement with a clause suspensive to obtain a loan : this document allows you to define a maximum date to obtain your mortgage.
- Compare bank offers : depending on your profile, you will get more or less interesting offers. You can also use the services of a real estate broker.
- Assemble your file : present to the bank all the necessary documents (income, professional stability, savings capacity, project, etc.) so that it can study your file. In case of acceptance, she will give you her agreement in principle and an official loan offer.
- Think when needed : you have 10 days to accept the mortgage offer and return it signed.
- Sign and register the bill of sale : the last step is to sign with a notary to officially become the owner.
- Pay the first monthly loan : it generally occurs the month following the signing of your bill of sale.
Do you have to go through a broker or a bank to take out a mortgage?
For take out a mortgage, you have two options: go through your banker or through a mortgage broker. There is no better choice than the other since everything depends on your profile. If you don't have time to go around the banks and present your file to get several offers, use a credit broker can save you valuable time. This professional works in collaboration with several banking centers, which allows him to send your completed file directly to several banks. However, contacting a bank directly also makes it possible to Negotiate the terms of your credit : sometimes, it can align with your requests to keep you as a customer and you can get a better rate.
Les terms of a mortgage are essential to measure your profitability or to maintain a good rest of life while repaying your monthly loan payments. Know that a real estate broker can fully advise you on the steps to follow and the pitfalls to avoid. Les apartment hunters of Parlez-moi de Paris accompany you in your Looking for properties in Paris and shares with you his real estate expertise !
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