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.
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.
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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