You have decided to invest in real estate?
Are you ready to go looking for the house or apartment of your dreams? To achieve your ends, you will have to take out a mortgage – a long-term operation that requires going through many steps. Here is a practical guide to accompany you throughout your mortgage.
Estimate your budget before looking for the property of your dreams
Do you know how much you are able to borrow at the bank? Do not wait to have signed a sales agreement to find out: proceed to estimate your budget upstream of your real estate project. In order :
- Take stock of your personal contribution . This is the amount you will inject into your home loan, usually 10% of the total amount borrowed. Knowing that the subsidized loans have value of contribution in the eyes of banks.
- Estimate your borrowing capacity : to get it, add up your monthly income and deduct your expenses (current credit, rent, insurance contracts, mandatory fees). Your borrowing capacity can not exceed 33% of your income.
You will have an estimate of the mortgage you can contract – and an idea of the type of property you can buy.
Seek out the most advantageous home loan
Once your future home is found and the sales agreement signed, you have a period of 45 to 60 days to obtain a mortgage. Take a tour of lending institutions to compare financing offers, keeping in mind the following two points:
- The interest rate : it will determine the total cost of interest on your home loan;
- Ancillary costs: application fees, cost of the borrower insurance , guarantee fees, etc.
You have the possibility to contact a broker : he will help you find the most suitable financing by negotiating on your behalf with the credit institution.
Build your mortgage application
Before granting you an agreement in principle for a mortgage, your bank will ask you to build a file. Here is the list of supporting documents to provide:
- Your last 3 payslips (or balance sheets);
- An employment contract or any other document attesting to your professional situation;
- Your last 2 tax notices;
- Your last 3 bank statements;
- Proof of identity and domicile;
- A copy of the sales agreement;
- Proof of the amount of your personal contribution.
Other parts may be required, especially if you take out loans helped with your mortgage application . If you take out a loan with a co-borrower , the co-borrower must provide the same documents.
In order to protect yourself, the bank will also ask you to guarantee the financed property. This can be done through a mortgage , an IPPD (Privilege Listing of Deniers of Deniers) or a bond (via a surety company or mutual guarantee accessible only to certain officials).
Accept your loan offer and sign the definitive act
Your bank sends you a mortgage offer approximately 1 month before the signing of the definitive deed . This offer summarizes the amount of the loan, the interest rate , the repayment period, the monthly payments (insurance included), a depreciation schedule , as well as the general and special conditions. (This applies to a fixed rate credit.)
The loan offer is valid for at least 30 days, and you can only accept it after a fixed period of 10 days. If it suits you and everything is in order, all you have to do is sign it and send it to your bank by registered mail.
That’s it, you have officially contracted a mortgage ! The funds will be released after the signature of the authentic deed of sale at the notary, either in one go (for the purchase of an existing real estate), or in several stages.