When you have decided to buy a property, it remains to fund it. Unless you pay for your purchase in full by an influx of money immediately available, you need to find a funding solution. Several options are available and may in some cases, be combined. Make your budget analysis carefully before you even find your property: you will gain time and efficiency. Also made an analysis of different types of insurance available to you, especially if you have or have had health concerns (possibility of a quote). In person at your financial institution having a clear idea of the amount you borrow and solutions, including insurance-that are available to you, you will be in a better negotiating position.
The bank loan
The most common solution used to finance the purchase of a property, alone or in conjunction with a personal contribution and / or loan assistance, the bank loan is distributed by deposit banks and certain institutions. It can either fund your future residence, second home or rental investment.
To make this loan, the bank may ask you a personal contribution of 10% or 20% of the total amount of the transaction to be funded. Estate agency fees are part of cost. The bank will send you a loan offer, the conditions remain valid 1 month from the date of receipt.
The financing package file contains a series of simulations on the life of the loan (duration, timing, monthly repayment, interest rates, …) from documents (pay slips, tax schedule, family book, …).
The duration of a mortgage bank is not limited by regulations. However the increase in property prices and also the lengthening of life lead to a lengthening of the duration of the loans which leads more and more people into debt with maturities of more long, which can reach up to 30 years and over. Currently, the average is around 20 years . But the actual duration is much shorter, around 12 years, due to the occurrence of events in life that allow early termination of a reimbursement (resale of existing property at a profit, inheritance, gifts, …) of the loan.
Repayment capacity
The banks are calculating your debt capacity , that is to say, the capital that we can borrow from several factors, both objective (your income Are regular variables?), your situation (CDD, CDI? …) and your tenure, your capital, the availability of subsidized loans, and subjective … (family, age of the relationship …).
Sometimes they may apply a ratio of 33% debt in relation to your annual net income. If your income is variable, the bank will be more cautious and more easily retain a 25% rate. If you have high income, the bank will be more conciliatory and will exceed 33%, considering that you will have the same monthly payment after your borrowing costs, a reasonable balance available.
The repayment schedule that will give you your institution will specify the structure month by month (principal and interest) from your refund. Keep it safe.