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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