What is a home loan?
Have you found the accommodation of your dreams and wish to become an owner? The mortgage, or mortgage, is a bank loan intended to finance totally or partially:
The purchase of real estate (main residence, secondary residence or rental investment)
Or work on this one
A mortgage binds you contractually to a bank. The latter agrees to lend you money so that you can buy your property at a given time, against full reimbursement of this sum with interest. This classic mortgage loan formula can also be adapted to different variants that we will see later.
According to the latest figures published by INSEE, 58% of mainland households own their main residence. Among them, about a third are first-time homeowners, that is to say they have not yet finished repaying their mortgage to acquire their main residence. The mortgage remains a delicate and essential step, especially when it concerns the purchase of your first house or your first apartment .
How does a mortgage work?
The pricing of a mortgage is based on 2 basic pillars that it is very important to take into account as a borrower:
The interest rate of the loan.
These two essential data can allow you to know the amount of the monthly payments that you will have to repay.
In the background, there are also many additional costs that must be taken into account in the pricing of a mortgage:
The borrower insurance and guarantees taken by the bank
Any early repayment penalties
The mortgage guarantee in the event of a loan of this type
Calibration of your amortizing loan
If these additional costs inevitably increase the cost of your mortgage, it is above all determined by the interest rate at which the bank grants you your mortgage. As a reminder, here is what constitutes the total amount you borrow:
Does the loan offer cover the notary fees?
Generally, it is the personal contribution of a borrower that allows him to pay the various ancillary costs, and in particular notary fees. If he does not have one, he can also apply for 110% financing by anticipating the cost of these notary fees. The loan offer will then cover this expense.
We advise you to properly calculate your notary fees before your loan application for the purchase of your principal residence. Their amount can vary significantly depending on the location and type of your property (new or old, the old generally having a much higher percentage). Notary fees are a major component in making your decision to buy new or old.
Why is getting the best real estate rate so important?
Mortgage loans come at a cost, which is defined by your interest rate. You will therefore have understood that it is very important to take advantage of the best real estate rate in order to reduce this cost as much as possible.
And how is the interest rate on your mortgage calculated? The banking establishment is based on 3 elements:
Financial market rates
The costs of creating your mortgage, that is to say all the operating costs of establishing your loan
The bank’s margin
So how do you get the best real estate rate to lower the cost of your credit? Nothing is more important than presenting a solid application file to the bank.
The more you present a risky profile, the more you will see yourself applying a high mortgage rate. But there is a solution to lower it: personal contribution. This will inevitably reassure your bank. Ditto if you add assisted home loans such as the zero rate home loan to your financing plan.
However, even if it is essential, a low mortgage rate is not the guarantee of obtaining the best mortgage. The other element that influences the price of your mortgage: its duration. Indeed, lower monthly payments for a longer repayment period will certainly weigh less on your monthly budget but they will cost you more on arrival since you will pay interest for longer.