The 13 Steps of a Real Estate Loan
Budge your project
Before you start a mortgage, it is important to know the overall budget of your project:
- Evaluate your borrowing capacity
- Bank account opening fees
- The notary fees (3% of the purchase price for a purchase in the new against 7% in the old).
- Any fees related to the advice of a credit broker
- Guarantees for housing or mortgage loan
As well as the expenses related to your future accommodation:
- A possible move
- Work to be planned
- Property taxes if you become owner
- Potential condominium fees
Evaluate your borrowing capacity
After having budgeted your project, it is important to make an inventory of your borrowing capacity.
|Your money entries||Your money outings|
|The salary or wages (average over the year)||Taxes (on income, property taxes)|
|Premiums (only if they are regular)||Variable loads (electricity, gas, water …)|
|Family allowances||Fixed charges (internet, TV, telephone)|
|Rental income (excluding charges and taxes withheld)||Insurance (home, auto, health, welfare …)|
|Investment income (life insurance, retirement, stock savings plan)||Current credits (car, motorcycle) think of the redemption of credits that will help you reduce your monthly payments if necessary|
Remember to determine the proportion of your personal contribution (available share that you have and that you will use for your real estate project). This contribution can come from different sources: personal savings, help from a relative or close, inheritance, added value on the resale of a good, etc.
Attention, the part of your personal contribution is not negligible, it will be important to determine the cost of financing your project and its duration.
It is important to correctly measure the total amount of outstanding costs (loans, other loans in progress, household expenses).
Namely that monthly mortgage payments should not exceed 33% of the net income of the home.
Remember to clear up its shadows with the bank or mortgage broker you will use.
The promise of sale, the compromise and the reservation contract
In the new as in the old:
The promise of sale is the act by which the seller agrees to transfer his property by defining the terms of sale.
Be careful to make the difference between a promise to sell and a compromise. The latter does not engage you in the same way.
By signing this contract, you agree to take possession of the property and to finance it, in the promise of sale: you reserve the right to buy or not within a period previously defined upstream with the seller.
The two options generally entail the payment of a deposit (security deposit) representing a maximum of 10% of the selling price of the property.
You can decide to insert a suspensive clause of non payment in case of refusal of loan by the bank, or a discovery of a construction error on the habitat etc.
A retraction period of 7 days is possible in order to cancel the acquisition.
Note: In case you decide to wait for the loan agreement from your banker, do not forget to include a clause stipulating that in case of refusal from the bank, he is free from any financial commitment and can recover his indemnity.
The processes are not the same depending on the type of housing:
For a sale in a state of completion, you will have to sign a reservation contract before the signing of the construction contract. This contract reserves your accommodation with the manufacturer. You will then have to make a deposit from the moment you have agreed on an agreement with your builder. (from 2 to 5% of the selling price according to the time of signature of the contract of sale).
Find your financing
When you finance your property with a mortgage, you have 45 days to get a loan from the credit institution you choose.
It is essential to play the competition between banks to get the best rate and the best conditions for your loan.
Through DevisProx, you can compare the rates of the banks for your mortgage but also the insurance of your future loans. The benefits of going through a credit and loan insurance broker are relatively simple:
Efficiency: a credit specialist accompanies you in your search for financing and insurance.
Speed: Credit expert, our partners collaborate with all banks and financial institutions specializing in mortgage loans.
Savings: Our partners allow you to save on the total cost of your credit and insurance by selecting the best rates on the market.
Fit your file
Once the choice of the establishment realized, it is time to mount its file in order to provide the bank, all the parts necessary for the realization of the bank loan. If you appealed to a broker in real estate credit, it take care of everything, it helps you to build your financing file (pay slips, tax notice, proof of residence, recent account statements, sales agreement etc.) and will submit it to its banking partners to study the best financing solution.
The agreement in principle
Shortly after studying your file the bank expresses its acceptance (or not) of the loan, this is called the agreement in principle. Without this agreement, the acquisition of real estate can not take place.
Opening an account in the lending institution
In general, the bank that accepts the loan, will ask you to open an account at home and to house all your income.
The loan offer
This document is sent by the lending institution to formalize the characteristics of your loan.
The reflection period
After a meeting with your banker, you have a 10-day cooling-off period to retract.
Acceptance of the offer
Once the terms of the loan accepted. You must send by registered mail the signed offer to validate the agreement.
The notarial deed of sale
The acquisition of your property must be the subject of an official act by a notary.
Following this, you will receive a few days later your title issued by the notary.
After signing, your buyer status becomes the owner of the property.
The repayment of the mortgage
The repayment of the mortgage begins one month after the signing of the deed of sale. Monthly payments are defined by the rate of credit and insurance. You will find them on the depreciation tables corresponding to your real estate financing.
Finally owner, your last steps:
- Organize your move
- Make sure your real estate.
- Protect your home against damage and property (furniture, appliances, personal belongings etc.) and enjoy coverage