In a context of still very low interest rates - 1.12% on average (excluding insurance) in November, according to the Crédit Logement / CSA observatory - the real estate market is operating at full capacity. But if the banks are inclined to finance the projects of the French, they do not lend wrongly and through.
The selection of candidates for property is made on a case-by-case basis, depending on multiple factors.
What is your personal situation?
When considering your loan application, a banker will start by taking an interest in your lifestyle. If the amount of your income is essential, know that your profession is just as important. An employee on a permanent contract or, better still, a civil servant, will be much more appreciated than an entrepreneur starting a business or a worker chaining precarious contracts. The first concern of lending institutions is to limit the risks of non-repayment of maturities. Therefore, they favor candidates with a good professional situation, in other words those who have both stable and regular income.
On the other hand, bankers do not like high rollers. To put the odds in your favor, you must show that you have responsible management of your finances. This notably involves a regular savings effort, a limitation of overdrafts and a low use of consumer credit. Ideally, it is also preferable to have a good contribution, corresponding to approximately 10% of the amount borrowed, in order to cover at least the various fees and taxes (commonly called notary fees).
How much can you afford?
It is then a question of knowing if your project is well proportioned to your situation. Clearly: don't you have the madness of grandeur? To this end, the banker will first determine your debt ratio. This involves assessing your borrowing capacity by calculating the difference between the net income of your household and the amount of monthly payments to be repaid for the loan requested. If, for the time being, no legal ceiling exists, establishments generally apply a maximum debt ratio of 33%. Because the more a borrower is taken by the throat, the more there is a risk that he will not be able to discharge his debt. However, the High Council for Financial Stability (HCSF) has recently alerted the sector to the fact that 28% of the loans currently granted do not comply with this tacit rule, which is however essential.
This ceiling is not an absolute rule, insofar as the borrowing capacity is also assessed with regard to the "remainder to live" which is, this time, framed by the law. This amount corresponds to the amount necessary to meet your current expenses: accommodation, food, travel, tuition fees ... On the calculation side, you must deduct from your monthly net income all your fixed charges and taxes, as well as the estimated monthly payments of the credit . The amount obtained must not be less than that of the RSA (active solidarity income), or nearly 560 euros for a single person. If you have dependents, the amount is increased by 50%.
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Understanding the "jump in charges"
To determine if your eyes are not bigger than your stomach, the banking establishment will also take into account what is called "jump loads". In the case of a tenant, it is the difference between your current rent and the future maturity of the loan that you covet to become a landlord. However, this difference must remain reasonable and consistent with the level of your income.
Going from a rent of 800 euros per month to monthly payments of 1,300 euros without having a significant increase in salary may seem like a risky bet from the point of view of a banker. Again, an assessment is made on a case-by-case basis, with regard to your debt ratio and your remaining living.
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