With the rise in mortgage rates, more and more individuals can no longer borrow. If for some, the mortgage loan can be a solution, this method is expensive.
We don’t tell you anything more, the mortgage market has hardened in recent weeks. With a usury rate, the maximum rate at which a bank can lend, set at 2.57% until the beginning of October for loans of 20 years and over, the atmosphere is not festive.
Indeed, the average rate for a loan over 20 years is 1.85% at the beginning of July according to the broker Meilleurtaux. However, this nominal rate must include ancillary expenses such as notary and file fees, but above all loan insurance. And its amount can climb quickly depending on the age of the borrower. As a result, many individuals are refused a mortgage because the overall rate, also called APR, exceeds the wear rate.
Do some work, go on vacation or buy a Ferrari
But then, should we give up credit if we are in this situation? Not necessarily! Little known in France, unlike countries like Belgium or Switzerland, the mortgage loan makes a place for itself in France.
How then to claim it? First of all, you must be the owner of a property located in France, and have finished reimbursing it. Then, rather than a classic loan with borrower insurance, the bank can offer you not to go through a surety organization but to put the property you own as security, explains Ccile Roquelaure, spokesperson for the broker Empruntis. As soon as you go to the notary, to take as collateral, in real security, real estate to guarantee your credit, you are on a mortgage. If you pay your loan as expected, no worries. In the event of non-payment, on the other hand, the bank can resell your property to reimburse itself.
You would have understood it, impossible to finance your main residence in this way if you are a first-time buyer, since the very principle of the mortgage loan is to offer the bank to secure the loan it grants you with real estate that you already own. A mortgage loan is therefore possible for the purchase of a second home, with a view to buying a property to rent it out or even to acquire a property abroad.
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This mode of financing would also be increasingly used for finance an operation having nothing to do with real estate. You can also make a mortgage loan to have cash, confirms Ccile Roquelaure. I can pledge real estate and ask for financing of 50,000 euros to pay for a dream trip, a motorhome, SCPI shares… If you’re happy, you can even buy a Ferrari! According to Empruntis, more and more people are using this process, for example, to pay estate fees or embark on major work in their accommodation. The amount that can be financed in this way varies from 22,000 to 750,000 euros.
Be careful though. The mortgage loan cannot be used for just any project, and for good reason: setting it up is expensive. We do not make a mortgage loan just to pay for a vacation, judge Sandrine Allonier, spokesperson for the broker Vousfinancer. There are very high fees, between the costs of setting up the mortgage loan, notary fees, expert fees, guarantee fees, administration fees… We have for example the file of a borrower who wishes a financing of 127400euros. With fees, the total loan amounts to 136,000 euros, or 8,600 euros in fees. And in the context of a real estate purchase, for a second home for example, you have to add to the notary fees (7 to 11% of the value of the property in the old one) another 1 to 2% for the mortgage.
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In addition, there are still few banks that offer this kind of credit, they are specialized banks or credit consolidation banks, notes Sandrine Allonier. And the latter most of the time refuse to finance projects below 50,000 euros, or even 100,000 euros for some. The mortgage loan is therefore often used for more complicated projectsexplains Sandrine Allonier, who cites as an example funding files for the purchase of works of art or real estate in Europe.
For the rest, it works like a classic credit. Loans for real estate with a duration of less than 20 years must comply with a wear rate fixed at 2.60% (2.57% for loans of 20 years and over). If the mortgage loan is not affected by real estate, it must comply with the wear rates of consumer loans.
The bank then sets an amount, a repayment period (from 60 to 300 months) and an amortization schedule. And as ready, mortgage credit is subject to rates that vary depending on the duration and profile of the borrower. There is no classic bar, confirms Sandrine Allonier. For a real estate loan, one of our partners is currently at 2.40%. For a non-real estate mortgage loan, we are at 4.30%.
Mortgage credit in brief
For who? Owners, with taken income, of a property without outstanding credit. The credit must be repaid before the borrower turns 95.
How much? From 22,000 euros to 750,000 euros, according to Empruntis, from 50,000 euros according to Vousfinancer, in compliance with the mandatory debt ratio (35% after project). The bank often agrees to lend you up to 70% of the value of your house.
Can I offer several properties as a mortgage for the same loan? The taking of guarantee on several goods is possible. But in all cases, the latter must be free of any outstanding credit or guarantees in progress.
How long? The duration of financing varies from 60,300 months.