Real estate credit. Who can still take advantage of the best rates?

The appetite of individuals for real estate is not weakening. According to the latest figures published on September 10 by notaries and INSEE for the second quarter, the French enthusiasm for stone is still there despite the economic consequences of the epidemic of coronavirus. Sustained demand which keeps prices rising. Real estate remains a safe haven for everyone, summarizes Maël Bernier, communication director of the broker Meilleurtaux. And good news for potential buyers, mortgage rates still remain at very low levels, even close to historical records.

Yet, on closer inspection, the situation is more complex than it appears. A year ago, with good income, a little contribution and a reasonable debt, it was easy to be offered a rate of 1% for a mortgage over 20 years. Today it is much more complicated. If the norm is around 1.3%, it is still possible to get a credit at 1% or less. But this privilege is now reserved for less than one borrower in ten, according to Maël Bernier.

Big income and a nice contribution required

Indeed, it is possible to have a rate up to 0.90%, or even less. However, one must show a white paw. The annual net income of the household must exceed 80,000 €, or even nearly 100,000 € in Paris! That’s not all: better to have some money aside. The banks almost all systematically ask for a 10% contribution to finance the costs linked to the purchase as well as a residual savings after the operation, of 5,000 € on average, in the event of unforeseen events or hard times. And to have a good rate and limit the risk, it is better to have another 10% more contribution, so that the bank finances only 90% of the value of the property. In total, that makes more than 20% of the requested contribution!, notes Sandrine Allonier, spokesperson for the broker Vousfinancer.

No more than 33% debt

In addition, the debt ratio – that is to say the ratio between income and monthly loan payments – must not exceed 33%. A rule followed to the letter by banks since the High Council for Financial Stability, the “Council of the wise men of finance” , chaired by the Minister of the Economy, demanded at the end of 2019 thatthey tighten the mortgage valve to avoid a runaway market. Result, according to Maël Bernier: cases that do not pass at 35%, despite a good rest to live. Example with a household earning € 9,000 net per month, before income tax: today, the maximum monthly payment offered cannot exceed € 3,000, whereas before a bank would have accepted a reimbursement of € 3,150 to have a larger credit.

Among other criteria allowing to have an attractive rate : the professional situation of borrowers, and in particular the sector of activity, is taken into account, especially in view of the economic uncertainties for the months to come. Last weighty argument to finish the banker to make a golden proposition: to have savings, in addition to the contribution, that you can entrust to him.

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