To carry out your real estate transaction, you will certainly have to negotiate several loans in different organizations. It is this "stacking" of different loans that can allow you to carry out a good transaction at the best rate. There are several kinds of mortgage loans for individuals. Mortgage loans can be classified according to the regulations to which they are subject.
The conditions for granting these loans depend on the acceptance criteria of financial institutions: either banks or specialized institutions. The rates and terms are different depending on the bank but must respect the legal texts. In particular, the rates offered may not exceed the usury rate published by the Banque de France.
It is the most reassuring type of loan because the rate, the monthly payment and the duration of the credit are established at the signing of the contract. These characteristics are fixed and cannot change subsequently (except at your request). An inflow of money or a drop in income may indeed lead you to modify your contract, provided that your banker accepts the transaction.
Some new contracts now provide for these kinds of changes. The rate that is set is generally higher than that of adjustable rate loans, but this gap has tended to narrow since the end of 2007.
For whom : all individuals
Why : for any type of real estate transaction, new or old, for a primary or secondary residence.
How much : no particular constraint except for your budgetary repayment possibilities.
In how many months : due to the increase in real estate prices, the maximum repayment periods now vary between 15 and 40 years. The long periods are more intended for young couples "first-time buyers".
It is most often a mortgage at adjustable rate which is presented to you because the posted rate is the lowest. When you sign a revisable rate loan, you are not sure of the duration and amount of the monthly payments .
Every year (or every 6 months depending on the contracts) your credit is reviewed in relation to market rates (generally Euribor 3 or 12 months). In the event of a rise in rates and depending on the contracts, this will have an impact:
- either the monthly payments will increase but in this case, the credit term remains the same
- either the duration is extended but without increasing the monthly payments
- either the monthly payments and the duration will increase in order to cushion a little more the impacts on your budget.
Some home loans at adjustable rates are capped , that is to say that you have protection against an immoderate rise in rates . When signing the contract, the bank indicates the maximum rate you can reach. It can still be 2 or 3 points higher than your opening rate ...
Despite everything, this capped credit formula makes it possible to better control future rate increases. Note that in the event of a drop in rates, you can also benefit from a reduction in your monthly payment or a reduction in the duration of the credit, depending on your contract. For capped credits, the decrease is also possible but with a floor.
This operation allows you to buy a new home (or a house) while the previous property has not yet been sold . The bridging loan is generally set up for a period of one year. During this period (until your property is sold) you only pay interest on the borrowed capital.
Several formulas for paying interest:
- every month as a monthly credit payment
- all at once for the resale of the property ( ultimately ), this is the most often chosen formula, but also the most expensive.
The bridging loan is always a fixed rate loan . Its main feature being to be reimbursed in less than a year , there are no prepayment charges. The amount of the bridging loan cannot exceed 60 to 80% of the value of your old home. Note that your bank will make you take out death insurance for the entire period of the loan.
Please note : some establishments offer you to combine your bridging loan and your new complementary loan. If the system seems simpler (one credit), in fact, it is more expensive than having 2 separate loans.