(Photo credit: Pixabay – annca)
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Have you found a property that you like and that you want to buy? It is therefore a safe bet that you will be able to use a mortgage to finance your property. To put the odds on your side and get your loan at the best interest rate, you should carefully follow these 5 rules.
Mind your personal contribution
In order for your credit file to be accepted, you must first justify a personal contribution that corresponds to at least 10% of the acquisition costs (price of the property + notary fees + possible work). Please note that some banking institutions even charge a contribution of 20% of the purchase amount. You must therefore hold this amount for various investment vehicles that you will be liquidating at the time of purchase.
Establish a substantial income compared to your loan
The rule of thirds still applies: at least in theory, you can only owe a third of your income. This means that the monthly loan payments cannot exceed 33% of your monthly income. The largest incomes can deviate from this principle, but this remains exceptional and the practice has become even rarer since the Supreme Financial Stability Council tightened the screw. So it is better to have an income that matches your real estate project. Not sure many banks allow you to run a loan simulation to see your monthly payments or credit capacity.
Limit your debt
You should also try to limit your debt and demonstrate the soundness of your finances. Not only do you not need to go into debt with monthly loan payments that exceed 33% of your income, but you also need to maintain as much savings as possible, a sign of the health of your personal finances. It will also be appreciated if you can keep one or more investments for precautionary savings and funding long-term goals without having to mortgage them. You will assure your banker that you mean business.
Demonstrate the good performance of his personal finances
Another aspect that shouldn’t be overlooked is managing your accounts well. This means that you do not have to book any overdrafts in the 12 months prior to your loan application. It will also be necessary to pay off any consumer loans. If possible, reassure your banker by presenting regular cash inflows.
Be a good customer
While it is recommended that you submit your file to several banks in order to compete, you should not neglect your current bank, especially if you have been a customer for many years and have always presented flawless accounts and know your bank advisor. This could come in very handy.
And when you finally plan to take out a mortgage in a new banking institution, do not hesitate to settle down there and offer to domicile your income there, for example in return for a small commercial gesture like deleting folders.
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