Insurance Home Loan - Part 3

Validity and acceptance deadlines

After negotiating the conditions of the mortgage with your banker, it publishes a credit offer. Its validity, the time limits and terms of acceptance or waiver of the offer are regulated by law.

The loan offer validity period: 30 days

The mortgage contract offer is sent to you by the Bank by mail. It shall not be returned by hand to hand.

The offer is valid at least 30 days following its receipt by the borrower. During this time, the Bank must maintain unchanged the terms of its offer.

The loan offer acceptance period: 10 days

Receipt of the supply of credit, the borrower has a minimum period of 10 days of reflection. You can give your acceptance after expiry of that period. That the loan offer can be signed and returned only from the 11th day. The day of the receipt of the offer does not count within the time limit.

To express your acceptance, you sign and date the offer and you return it by mail to the Bank. To verify compliance with the period for acceptance of 10 days, this is the date of the postmark which is taken into account.

Cancellation of the loan for non-conclusion of the real estate transaction: 4 months

The loan contract is accepted provided that the real estate transaction funded by this appropriation (acquisition, construction or work) is itself entered into, within a period of 4 months. If at the end of these 4 months, the purchase contract is signed, the credit agreement is automatically cancelled. The borrower is no longer bound by the loan.

This minimum period of four months may be extended by the parties, buyer and seller.

Suspensive condition of credit: 1 month

The compromise or the promise of sale has a suspensive condition of funding by the purchaser, when it finances its purchase by credit.

This condition precedent is valid for at least a month from the signing of the preliminary contract of sale. This period may be extended by the parties or be extended to the expiry of the minimum period.

You have in practice a minimum month to find the loan. If the Bank you are denied credit, the sale is cancelled. The sum paid at the signing of the promise of sale, usually 10% of the selling price is refunded to you.

Waive the benefit of this clause, pay attention to the consequences

You can waive the benefit of the suspensive condition by appending a handwriting in the preliminary contract of sale.
But attention to the consequences of this waiver. If you need a loan, you won't be able to benefit from the protective provisions of the Act. If you do not get the loan you need to abandon your purchase, you must pay to the seller the sum paid to the signing of the agreement for sale.

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Insurance Home Loan - Part 2

Ability to repay

First and foremost, you must calculate your ability to repay!

To do this, use our real estate debt calculator; it will tell you in a few clicks the sum that you can reasonably affect your refund. The calculator will also estimate the total cost of your credit at the end of the contract, i.e. the corresponding sum to capital and interest and various charges set.

Banks calculate your debt capacity, i.e. capital can borrow from several elements, both objective (your income are regular, variable?), your situation (CDD, TDCI...) and your professional seniority, your personal contribution, the existence of loans helped... and subjective (family environment, length of the relationship...).

Sometimes, they can apply a ratio of 33% of debt compared to your annual income net. If your income is variable, the Bank will be more cautious and more easily retain a 25% rate. If you have high income, the Bank will be more conciliatory and will exceed 33%, considering that you will have even after the monthly repayment of your debt loads, a reasonable available balance.

The payment schedule that will give you your institution will provide you month by month the structure (capital and interest) of your refund.

The interest rate

The repayment of the loan is due constant or variable. It comes with a fixed or variable interest rate. Refer to your loan contract.

The form of the reimbursement is not rigid, but it is most of the time by direct debit authorization signed at the signing of the loan offer that you will proceed to the refund.

The overall effective rate (TEG)

The overall effective rate (TEG), which is the rate integrating all the costs related to a credit must be included on your loan offer. Its calculation includes interests, but also insurance in the case of loans real estate, fees, commissions or remuneration of all mandatory kinds for obtaining credit. The fixing of the rate of the loan is free by establishing credit, but within the limits of the threshold of wear

who is the legal maximum threshold calculated each quarter.

If the interest rate is fixed rate, this means that the monthly payment and the total cost of the credit are fixed in the loan offer and will not vary during the duration of the contract. The advantage is that any increase in the rate of the credit is excluded. On the other hand, a possible lower rates may not be granted.

If on the other hand, the loan rate variable (or rolling), this means that the rate will follow the variations of a reference index defined in the loan offer and related to financial markets, making it impossible to the initial calculation of the total cost of the credit.

It is to overcome this financial risk and also to fix the borrower throughout the loan, institutions typically offer the formula of the capped loan that corresponds to a variable rate capped at higher loan (or even also downward) may not exceed a cap (or a percentage) fixed in the loan contract.

Also says "in fine" when the repayment of capital occurs in only once at the end of the contract.

Then? Fixed rate or adjustable rate?
If you're like the majority of the French, you enter a loan fixed rate. In fact, according to statistics of the Observatory of the financing of the residential markets, in late 2008, the vast majority of Outstanding
and almost all new credits were granted to fixed rate.

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Insurance Home Loan - Part 1

Solution most commonly used to finance the purchase of real estate, single or in addition to a personal contribution or a help loan, Bank loan is distributed by RIR or some specialized institutions. It can also finance your future primary residence, a second home or rental investment.

The implementation of the loan

To make this loan, the Bank may ask a personal contribution corresponding to 10% or even 20% of the total amount of the transaction to finance.

Real estate agency fees are an integral part of the cost, where it is intended that they be paid by the buyer.

The financial package of the file consists of a series of simulations on the life of the loan (duration, timetable, monthly repayment, interest rate, amount...) from supporting documents (ballots salaries, tax schedule, libretto by family...).

The funds will be released while the final signature of the deed of sale, under the responsibility of the notary who will receive the deed and the deed of loan.

The duration of a mortgage bank is not limited by regulations. However the increase in real estate prices and also the lengthening of the duration of life lead to a lengthening of the duration of loans which leads more people to go into debt for increasingly longer periods, which can reach up to 30 years and more.

Currently, the average is around 20 years. But the actual duration is much shorter, around 12 years old, due to the occurrence of events in life that allow an early end of repayment (resale of the current well with income, inheritance, gifts...) of the loan.

Over the duration of the credit, the more its total cost for the borrower is. Why?

Because the interests are calculated, each due on the outstanding capital balance: more the rate of reimbursement is slow, most outstanding capital is important and more interests are high.
In return, longer duration of credit, most deadlines are low.

The personal contribution

This is the share of financing of your real estate project you have without borrow from the credit institution. The contribution consists of your 'cash', i.e. your personal cash flow and your mobilized savings also: booklet, PEL...

Although some establishments agreed to grant a mortgage without down payment of the borrower, a minimum is usually required and granted credit conditions are even better that this part is important. You should know that a personal contribution will condition the loan amount and often its duration or it’s monthly: more your intake is important, the short will be the duration of repayment or lower will be your monthly payment of reimbursement. We note that in the absence of personal contribution, the interest rate may be higher: 0.40 to 0.60%, or even more.

When calculating the amount of real estate purchase, do not forget to count the charges of the loan guarantee. Be aware that solicitor's fees, which may be important (about 7% of the selling price for a completed over housing 5 years) to be funded by a personal contribution or by loans assisted, but are not by regular Bank loans.

It is also recommended to keep a precautionary savings to cope with unforeseen but frequent expenses at a real estate purchase (heating, taxes...) and not to invest all of its availability in the personal contribution.

You can also contact your pension or welfare, which provides loans included most of the time between 3 K€ and 5 K€, as well as local communities that can make loans to accession under the no land.

Departmental structures such as Abdullah (Agency departmental for Housing Information) can usefully advise you on aid and regulated loans.

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Credit renegotiation without insurance

It is always possible to renegotiate the downward or upward his credit with the lender. But nothing requires your lender to accept this renegotiation.

The Bank is required to lower the interest rate for the category of loans supported by the State

The renegotiation of a loan is an operation by which your bank will replace the current credit by a new credit. If this change is made from another institution, known as '' loan redemption ''.

In General, better will be your relationship with your bank Advisor, more will be possible a negotiation. But what negotiate?

We renegotiate on the interest rates or over the life of the credit, which has change decreasing or increasing your monthly payments.

Negotiate the interest rate

If you want to renegotiate to lower your interest rate (fixed or variable) is that you consider that the evolution of the economic situation and financial markets oriented rates downward and you want to take advantage of this windfall effect. But the original contract cannot be changed without the agreement of both parties, and if some establishments will accept a drop, others will reject it without infringing the law.

If the institution refuses, you have two options that need to be studied carefully:

·       proceed to a prepayment, but this may cause a penalty, which will not necessarily be offset by the expected gain by the rate of new credit that you have been able to contract, likely from another institution;

·       do you redeem your credit by another establishment, but you will have also to set a penalty for prepayment to your current lender.

Negotiate on the duration of your credit

You may want to renegotiate the duration of your credit. If this possibility is provided for in your original contract, your lending institution cannot oppose, but otherwise, he may refuse.

In fact, it is less the duration of your credit as the monthly payment that will be modified, depending on whether your contract explicitly provides a Faculty of increase or decrease in the monthly payment. Contractually, if there is agreement of the two parties, this agreement will result in an amendment to the original contract which will determine the overall effective rate, the new schedule of depreciation and the total cost of the credit calculated on deadlines and fees to come.

If there is no need of new prior offers, you will have a cooling off period of 10 days from the date of receipt of the written information provided by the lender.

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Seniors and student Loan

Student Loan

Education is expensive sometimes. To finance this project, you can take out a student loan. Two solutions are available to you: the student loan guaranteed by the State or the classic student loan that you can get from your bank.

Seniors Loan

Banks have long been reluctant to make loans to seniors, including housing loans for a longer than average, because of their age.

Yet the situation has changed in recent years. Seniors are sometimes particularly creditworthy customers who are not afraid of unemployment. For the lucky ones, a level of comfortable retirement and a substantial personal contribution allows them to be particularly interesting clients.

The other factor that has also pushed the credit institutions to soften their stance and to more easily grant funding for senior citizens, is the lengthening of life expectancy. According to a study conducted by the economic and Social Council in March 2008, life expectancy is ten years, plus three years for females and two years for men. The direct consequence of this change is that today, a person 60 years a very large chance (three chances in four precisely) to reach the age of 80, according to the same report. Taking into account this fact, a senior 60 years can therefore quite contract a credit over 15 or 20 years unless his death occurring during the life of the loan.

Therefore, be aware that if you want to buy real estate or if you wish to undertake expenses for the trip of your dreams, the age is necessarily a barrier to your projects.

However loans to seniors have special conditions (particularly in terms of insurance) and credit can often be expensive.

Two forms of credit have recently emerged. It is the bonded mortgage loan originally launched by property of France and the life mortgage credit land. These loans have in common to integrate the value of housing to evaluate the creditworthiness of the borrower, while conventional loans do take into account the income of the borrower.

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How to ensure a free credit

The nominal interest offered by the bank rate is sufficient to compare the offers of credits or to determine the real cost of credit. Need to add fees, insurance, costs related to guarantees. Yields rate overall strength of the loan which allows to compare the rate offers in their entirety.

The amortization table details the various components of the total cost of the credit. Under the terms of repayment of the loan, the total cost of credit is amended.

Free credit

A credit is said to be 'free' when a trader offers you to pay for your purchase in several times and without any charges. In fact, advance you the amount necessary to purchase you are considering, but without making you pay interest on the amount advanced.

However, there is no truly free credit and credit interests are therefore to be paid by the merchant or financial institution providing financing on offer.

It is therefore an additional cost for the merchant that reduces his margin on the sale price, but allows him to sell immediately. For the consumer, this practice has the advantage of encourage them to buy immediately, without postponing its purchase at a time where it will have the necessary sum.

When the duration of the free credit is less than or equal to three months, it is not subject to the provisions of the consumer code protecting the borrower. A "three times free of charge" payment is not a consumer credit.

Free credit over three months: the same rules as for all consumer credit

A free credit, which lasts more than three months, is subject to the rules applicable to the consumer credit

The lender must give you a precontractual information sheet, which describes the characteristics of the proposed credit, allowing you to compare this offer with other proposals for credit. Then he hands you a credit offer that will have value of contract when it will be definitely signed by you and the credit institution.

You have a withdrawal period of 14 days calendar, Saturday, Sunday and holidays included, from the day of the signing of the credit supply.

The reduction of price in case of payment in cash is no longer required

The merchant is most obliged to grant a discount on the price if you pay cash while it offers a free credit, since September 1, 2010, pursuant to the law Mrs. Lagarde of July 1, 2010. But if the trader agrees a discount for payment in cash, this reduction on the price of the property must be included in advertisements, whatever the medium. The advertising must also mention that supports the cost of credit.

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Insurance, credit and Bank

Before give you a credit, the establishment in particular ensures that:

The regulation allows

Certain categories of loans, for example, are reserved for persons whose income does not exceed a certain amount. Similarly, a minor may borrow only a credit.

Your financial situation is compatible with the amount that you want to borrow and with repayments you have to do.

The jurisprudence is clear that the Bank has a duty to warn the borrower not notified in writing on a credit operation risks taking into account its financial capacity and debt which results from the operation.

When I agree a loan the Bank has the duty of me to warn against the risks involved?

Your interlocutor will check also that you have not known incident of payment in the past, but this type of verification to the national file of the reimbursement of individual incidents (see why is it registered to the FICP on the website of the Bank of France shall however not prevent to grant credit. It allows to know people still have an unresolved credit payment incident or who have a record of current indebtedness (within the limits of the legal time limit). Above all, are enrolled in the FICP that people who have had incidents of payment. The notion of positive, widely discussed file on the occasion of discussions on "credit consumption" law, would allow the bankers to know, for all customers, including those who have not yet known incident of payment - the State of debt - at least in France.

Some basic before borrowing tips

Avoid a too heavy commitment

Before you take out a loan, make sure you do not take a too heavy commitment. Do simulations with the calculators on our site and do not hesitate to ask simulations to your institution. They will show you precisely the refunds you'll have to perform according to the amount borrowed and the life of the loan. Do not forget that without exception, the monthly payments continue to be due even if your income declined.

Read the prior loan offer

Whether it is for obtaining a mortgage or a credit for consumption, the establishment you address a prior loan offer that describes the characteristics and conditions of the loan. Following the receipt of this prior offer, whose period of validity is 15 days for a credit, consumption and 30 days for a mortgage you have a period of retraction or reflection. Remember to use this time to reflect on the mastery of your future commitments, prior to the actual signing.

Compare offers

When you compare the different offers that you are made, take into account all the elements. Make your comparisons from the TEG (percentage rate) proposed. Mandatory in all offers and all acts of loan, as well as in advertisements, it allows you to have a vision of the overall cost of your financing and compare to competing offers of credit. TEG incorporates all of the costs required for the realization of your funding: nominal interest fees, cost of compulsory insurance. Also take a look at the other selection criteria that insurance, guarantees are taken by the institution, the early repayment conditions described in the contract of loan etc...Of course other advice tailored to the type of subscribed (real estate or consumer) credit you are given in the corresponding topics

The rate of wear

When you purchase a credit, the rate that you are granted cannot be higher than the rate of wear. This rate is calculated every three months for each class of loan from the average rates charged by banks during the quarter. It is published in the Official Journal at the end of each calendar quarter and can be consulted on the website of the Bank of France.

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Transfers abroad

To adjust a transaction, you can send money by wire transfer from your bank account to an account in a foreign bank. In the same way, you can receive a wire transfer emitted from an outside account into your bank account.

Abroad, in euro or in foreign currency transfers

A transfer abroad can happen currency (in foreign currency) and euro.

When you receive a transfer issued in foreign currency, the amount is converted to euros when it is brought to the credit of your account, it is certainly expressed in euro.

If you issue a transfer, it is your choice if you make it in euro or in the currency of the receiving country. Costs related to international transfers, outside the European economic area *, are usually borne by the transmitter. They include a commission, the amount is freely determined by the Bank, and foreign exchange.
The execution of the transfer time depends on each bank involved in this operation. There is no maximum time limit fixed by the regulation.

* The European economic area (EEA) includes the 28 States of the European Union (Germany, Austria, Belgium, Bulgaria, Cyprus, Croatia, Denmark, Spain, Estonia, Finland, France, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Czech Republic, Romania, United Kingdom, Slovakia, Slovenia and Sweden) plus three States on four of the EFTA (European free trade association): the Iceland, the Norway and the Liechtenstein. The fourth State, the Switzerland, is not EEA member.

The SEPA credit transfer

The SEPA credit transfer is a transfer harmonized at European level, for transfers issued or received in euros, to account in one of the countries of the SEPA area, either the 28 countries of the Union European + the Iceland the Liechtenstein + the Norway the Switzerland Monaco (thus 33 countries).

This transfer, fully automated processing, require harmonized Bank coordinates: IBAN (international banking account number) for the account number and the BIC (bank identifier code) for the code of the Bank. There are all these coordinates on the RIB.

The less than 50,000 euros SEPA credit transfer costs the same price as the national internal transfer (that it will gradually replace) except to the Switzerland. It guarantees a payment within the period of one day business (from receipt of the order for payment by the Bank), new time limit applicable from January 1, 2012, against three days previously. This period is extended by a day for transfers on paper.

For transfers made between countries in the economic area European, but executed in the currency of one of these countries, other than the euro, the turnaround time is four-day maximum. And the transfer may be charged differently than the transfer internal. This is also the case where the transfer relates to an amount greater than EUR 50 000 or if the coordinates of the beneficiary (Iban and Bic) are incomplete.

The transfer of money abroad (Western Union or Money Gram)

If you need to transfer money to a child travelling in a foreign or do you send money in an emergency, you can use the services of Western Union or Money Gram. Just to have a piece of identity and a code on which the sender and recipient must agree.

These devices are very useful in the event of particular difficulties (loss or flight of your credit card during a stay abroad), as the networks of these companies are particularly extensive in the world. However these services are very expensive (10% of the amount transferred) and so it is better to use only in case of necessity.

Prefer bank transfer to Bank if you choose. Otherwise the international mandate may be a solution, but the time limit is longer: 4 to 10 days (if outside Europe) for a classical term, 48 hours for an express term (However the term international express is far from being present in all countries).

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Pay by cheque or cash abroad

Pay cash abroad

This solution is of course facilitated throughout the euro area.

In other countries, you can obtain money through your credit card (check in advance with your bank in order to have an estimate of the costs) or by changing your liquidity in euro from the local banks or foreign exchange agencies.

When you withdraw money in a foreign country using your credit card, the commission levied by your bank includes a lump sum and the rest varies proportionally to the amount collected. To avoid paying too much fixed commissions, attempt to remove large sums, while remaining vigilant. Some banks also have partnerships with banks abroad in which you withdraw money from your card without charge.

Most often the exchange agencies located in airports collect significant costs. Does therefore not too change is money if you're in a large city because you will certainly be able to find better rates then.

The foreign exchange transaction has a cost: changer typically take a commission and the exchange rate may vary in your disfavor from the day of purchase and the day of debiting your account.

For the most common currencies worldwide (US dollar, pound sterling, yen...), it is possible to get currency from before your departure from your bank. It is however take you in advance. It is the least expensive solution in general. For other currencies, you can request from the Bank of France.

Use travelers cheques abroad

Conventional cheques will be not useful overseas: little used, written in French, they will hardly ever be accepted.

On the other hand, it is possible to serve you from traveler’s cheques, provided that order them before leaving. This is checks in a pre-established amount issued in a particular currency, mostly in euros or dollars.

You pay the cost of issuance, but this means of payment is relatively safe and convenient since it is accepted everywhere in the world and guarantees a high security in case of theft or loss.

You can exchange at a bank in the country of destination for cash, or deal directly with some traders (e.g. hotels).

If the currency of the country where you are travelling is not available in traveler’s cheques, make sure that it will be possible to change euros on the spot. Otherwise you can get dollar traveler’s cheques and change them on the spot, but you will then pay twice a commission (for each change of currency).

Be careful to keep the receipt that is provided to you at the time of their purchase: it will allow you to oppose in the event of loss or theft, and especially to make you repay these values on site, quickly and free of charge.

Before leaving, sign each of your cheques only at the top and left. You will be asked for another signature, at the bottom left at the time of convert them into cash. This countersignature must be affixed before the bank employee to whom you ask the Exchange.

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