1. Have low debt and earn high income
The best credit rates are reserved for borrowers who have good financial capabilities. You must prove to the bank that you are capable of repaying the requested loan. The higher your household income, the more likely you are to put pressure on yourself to negotiate an advantageous rate.
But earning a high income is not enough, your cash flow must be stable and regular, which will give the lender more guarantees of stability. To determine the APR in a credit offer, the household debt ratio is a very important indicator. It must be below the threshold of 35%, after adding the monthly payment of the requested property loan , to hope to obtain the best APR.
The debt ratio will indicate the monthly percentage that your recurring charges represent on your income. The lower it is, the less likely you are to encounter financial difficulties during the mortgage repayment period. Your remaining living expenses will then be large enough to cover your daily expenses.
Our advice: is your debt ratio high? This means that it may be time to consider buying back your consumer and real estate credits, with Solutis, to reduce your monthly payments. This operation will automatically lower your debt ratio, allowing you to have better repayment conditions for your property loan to borrow next.
2. Have a stable professional situation
Your professional situation is a factor which will testify to the stability of your income. To reassure the lending institution, you and your spouse must practice a profession with a permanent contract. A permanent contract will support the quality of your file and reduce the risks of insolvency, at least in the short and medium term.
It will be difficult to borrow at very low rates with a precarious employment contract, such as a fixed-term contract or with a temporary status, or even simply to obtain a credit agreement. Therefore show that everything is going well in your jobs, that you are ambitious with a real desire to benefit from a promotion and earn more in the future. This will make it easier for you to negotiate a better real estate rate.
3. Not having any payment incidents or bank overdrafts in progress
Earning a high income is one thing, but knowing how to properly manage your bank accounts is another. The lending institution expects you to be responsible in managing your finances. Demonstrating to the bank that you have effective management of your budget is a real asset, even an almost sine qua non condition for obtaining a financing agreement.
She must have confidence in you, in your ability to repay your monthly payments without late payment or default. If you never, or rarely, have a banking incident, your accounts are never overdrawn and you save a sum of money each month, this good behavior will be rewarded by a very low interest rate in your real estate loan offer.
4. Make a personal contribution to pay notary fees
The personal contribution is an operation which will prove that you have been able to put a sum of money aside to finance your project. It’s a responsible gesture. As a general rule, the requested contribution must represent at least 10% of the total amount of the purchase price of your home. This cash must make it possible to pay notary fees in particular as well as various operating costs (real estate agency fees, etc.).
To hope for a nominal interest rate at the lowest on the market, you should not hesitate to inflate your real estate contribution to more than 20 or 30% of the amount of your project. The bank will have to finance a smaller part, because the contribution will cover part of the price of the house purchased. The risks it takes, by lending you a property loan, will therefore be reduced, which will give you the ability to negotiate better repayment terms.
5. Choose a short mortgage repayment term
The duration you want to repay the borrowed capital is a decisive factor for the rate proposal from the lending organization. Our advice is indeed that it be as short as possible, while taking into account your financial capacities, to benefit from a better rate. A home loan that is repaid quickly is less risky for the lender. Ideally, financing between 10 and 20 years provides excellent repayment terms.
Be careful, however, not to select a contract duration that is too short, as you will be charged a high monthly payment, which risks putting you in financial difficulty. You must give yourself a margin so that, even in the event of a problem, for example a job loss, you are still able to repay your installments until your budgetary situation recovers.
6. Insure the real estate loan over the entire duration of the contract
Given that a mortgage loan often represents a sum greater than €100,000, the bank takes a certain risk. To cover yourself against the risk of life incidents, which could lead to unpaid debts, you will have to take out insurance for your property loan .
In the event of disability following illness or incapacity to work after an accident, the insurance company will cover the monthly payments over a given period. It can even reimburse a certain percentage of the capital, depending on the proportions insured by co-borrower, in the event of death. It is therefore a cover for both the borrower and the lending bank.
Our advice: the cost of insurance is measured by the APR, which is added to the APR . To benefit from the best insurance rate, you can insure your financing with the professional of your choice. Solutis advisors can find you coverage at the lowest price, without denying the quality of the guarantees.
