It is not uncommon to look at mortgage loan offers after having a crush on a property. For many aspiring property owners, it is a cold shower when the bank tells them that their borrowing capacity is much less than what they expected.
All the more so as a general rule, lending institutions require that at least 10% of the operation be financed by a personal contribution.
Don't overestimate yourself
Before looking at real estate ads, you must therefore take stock of your situation, first within your household, then with your banker. How much savings do you have available without depriving yourself of an essential woolen sock? Can a loved one supplement your personal contribution? You must also establish the family budget for the past year. Apart from the rent, which will be replaced by the monthly installments of the loan, nothing should be forgotten, from the current loan of the car to the payment of alimony, through your taxation, insurance costs, gas, food or schooling for children…
This preliminary calculation makes it possible to determine your “remainder to live” once all the compulsory expenses have been paid and, thereby, to determine the amount of loan payments that you are able to assume. After an initial estimate by you, have the calculation validated by your banker. From this data, it will be able to assess your borrowing capacity.
However, as the equation varies according to the interest rate and the duration of the credit as well as the borrower's insurance costs, make several simulations with different banks, taking care not to be taken by the throat by a rate debt too high (the ideal is not to exceed 30%, with a maximum of 33%).
Screen the costs
So informed of your financial capacities, you can start an active search for accommodation. But before you position yourself on a property, think twice. The price displayed by the seller is far from the only expense to take into account.
We must first add what is called "notary fees", which actually include a large share of taxation. Count between 2 and 3% of the price of the property if you buy new, and up to 8% if it is an old home. You can calculate these acquisition costs on Immobilier.notaires.fr. To a lesser extent, your loan will also generate administrative costs. In addition, you must consider your acquisition in a more global way, starting by assessing the amount of any renovation work to be planned.
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Underestimated costs
Many homeowners forget to take into account the costs associated with a purchase, which weigh heavily on current expenses. Let us cite in particular the local taxation: if the housing tax is being abolished, you will still be liable for the property tax and the garbage collection tax, which can amount to several hundred euros depending the cities. There are also co-ownership charges. If the purchase of an apartment is often less expensive than that of a house, the annual accounts of the condominium can hold surprises. It is essential to first consult the statement of charges for the past year.
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