Credit and borrower insurance: what you need to know before buying

After a year 2015 marked by the recovery of the real estate market, the professionals of the sector count on the maintenance of a high level of sales, around 800,000 goods in 2016.

The real estate market is on the rise! First reason: historically low interest rates continue to fall and reached 2.09% in February. Also, the decrease in prices per square meter of 1.6% on average last year, the downward revision of notary fees or the strengthening of the Zero Rate Loan (PTZ) since January, contribute to boost sales. In a very favorable context for investment, a little reminder is needed on the few rules to know concerning obtaining credit and taking out loan insurance.

 

Prepare your mortgage loan application well.

mortgage loan application well.

If you plan to embark on a real estate investment, you must first assess your budget. Indeed, the amount of your contribution, the price of the property you want to buy or the other credits that you have in progress will have an impact on your loan. For example, it is important to keep in mind that the total amount of the monthly payments on your credits cannot exceed 33% of your income.

Certain fees may also increase the amount of loan required. If you go for example through a real estate agent rather than through an individual, you will have to pay a commission which can be up to 8% of the purchase price. Similarly, notaries’ fees may represent 7 to 8% of the purchase value in the old and up to 3% in the new.

The bank will integrate all these variables into the calculation of the loan it will grant you. A word of advice: favor loans with fixed rates or capped variable rates which will protect you against possible increases in interest rates.

 

Loan insurance: prefer individual contracts.

Loan insurance: prefer individual contracts.

Once the credit request has been accepted, your bank will require borrower insurance to finalize the transaction. Its purpose is simple: this guarantee will cover the reimbursement of the remaining credit in the event of death or loss of employment.

Very often, your banking establishment will offer to subscribe to its group contract. However, it is better to opt for individual insurance, which is cheaper and more personalized. The Lagarde law indeed authorizes the delegation of insurance, which means that a borrower can choose a contract different from that proposed by his bank.

One of the tips for finding affordable benefits is to go to online insurance comparators where you can access different offers from the cheapest to the most expensive. Note, however, that the contract chosen must be validated by your bank and that the guarantees must be of a level similar to those initially proposed.

 

Succeeding in your real estate investment

mortgage loan

It’s reducing the financial burden of certain compulsory costs simply requires a little anticipation and organization. In addition, do not forget that to support you in the purchase of a property, you can take advantage of a certain number of fiscal measures and devices, including the Pinel Device and the 0 Rate Loan.

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