While the mortgage market has always been regulated, banks previously enjoyed a certain latitude in the terms of granting loans.
This leeway was limited by the High Council for Financial Stability (HCSF) on January 1, 2022.
From recommendation to obligation
When looking to borrow to access the property, it is necessary to do the accounts to know what level of credit you can claim.
Without being carved in stone, it has long been customary for debtors not to exceed 33% of the debt ratio, except in specific cases.
It is moreover the HCSF which issued this recommendation in order to limit the risks of being drawn into a dangerous financial situation.
Similarly, to avoid being committed for too long, it is advisable not to exceed twenty or twenty-five years of credit duration.
Except that in practice, banks have taken more and more freedom with these recommendations in recent years.
While having raised its level of requirements, the High Council for Financial Stability therefore announced at the end of 2020, then confirmed in September 2021, that it would use its power to ensure that its recommendations become genuine binding legal standards.
This has been done since January 1, 2022.
Therefore, mortgage loans granted by banks must now respect a maximum debt ratio of 35% and a duration of twenty-five years.
A margin of flexibility is however left to establishments so that they can override 20% of their loan production and in particular in favor of buyers of principal residences.
And beware, in the event of non-compliance with these rules, the banks are liable to penalties!
What encourage them to be more selective in the choice of loan files.
Bet on personal contribution
To get your loan without difficulty and on good terms, it is therefore essential to display a limited debt ratio.
Indeed, the Vousfinancer brokerage network noted in early January that at least one bank had already decided to increase its interest rate scale by 0.10 to 0.20 point for customers who did not meet the standards imposed by the High Advice.
When possible, it is therefore better to draw more from your savings rather than relying entirely on credit.
Remember also that under the effect of the health crisis, the personal contribution has become the essential sesame for access to the loan.
“Most banks no longer want to finance more than 100% of the value of the property, and therefore the additional costs, in order to reduce the risk of non-repayment of the loan in the event of a hasty resale or a drop in the value of the property, explains Julie Bachet, Managing Director of Vousfinancer.
This is why most banks ask that the borrower finance at least the costs (notary fees, guarantee fees, administration and/or brokerage fees) with personal savings, which implies having around 10% contribution.
And if some banks still grant financing at 110%, having the contribution often makes it possible to obtain a more attractive rate”.
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The debt ratio under the magnifying glass
In order not to exceed 35% of the debt ratio, it is still necessary to know what we are talking about.
This calculation consists of making the ratio between your income and your expenses.
Add up your fixed cash income such as salaries, non-salaried professional income, retirement pension or rent received if you rent out some of your real estate.
On the charges side, take into account the rent you pay each month, as well as your possible monthly repayments for credits already in progress and those of the alimony paid to your ex-spouse.
Multiply the amount of your monthly expenses by 100, then divide by the amount of your monthly income to obtain your current debt ratio.
Then redo the calculation by replacing your paid rent with the monthly payments of the coveted loan to determine the maximum amount you can pay each month.
Be aware that free simulators are available online.
Real estate loan
Economy
Lodging
Debt
Bank
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