The mortgage loan: the loan reserved for owners3 min read
Do you already own a property and are applying for a mortgage to finance a new project? The bank can offer you the mortgage . It consists of mortgaging one or more existing assets to guarantee the new credit . This type of financing also makes it easier to obtain cash. Focus on the mortgage loan.
MortgageThe mortgage loan: the loan reserved for owners
The mortgage loan is a loan backed by a mortgage , and intended for property owners . As a reminder, the mortgage is a mortgage loan guarantee that allows the bank to seize the property in the event of default in repayment and if no amicable solution has been found. The mortgage loan allows:
to acquire a new or old property;
to buy a main or secondary residence;
to make a rental investment. In this specific case, the sums lent are only used to pay for the desired property or service. Payment is traceable and can be made either by call for funds or by payment of invoices.
In other cases, the mortgage loan can be used to obtain cash ( this is part of the advantages of a mortgage loan ) . The sum is then paid directly to the borrower without the bank’s right to inspect the use of the funds.
The mortgage can be fixed or variable rate. But when real estate rates are low as in 2021 for example, banks do not apply the variable rate because the values are already very low.
When to apply for a mortgage loan?
The mortgage loan is interesting in certain cases, in particular when you:
Want to buy a property abroad . In this case, the bank cannot take a guarantee on a property abroad. You must hold real estate assets in France which will be mortgaged to finance the purchase of the new property located abroad;
Are senior and wish to carry out a real estate project . The more you borrow at an advanced age, the more the bank takes a risk to finance you. If you own real estate, the bank can mortgage it to guarantee your mortgage;
Redeem credit . You want to group your credits to change the terms of repayment (lower your monthly payments by extending the duration of the credit). The bank can offer you a repurchase of mortgage credit when it requires the mortgage of your property to guarantee the consolidation operation;
Free up cash from your real estate assets . The mortgage loan allows you to rely on the value of your assets to provide you with cash that can be used as you see fit. It should be noted, however, that banks are reluctant to accept this category.
Am I eligible for the mortgage loan?
To qualify for the mortgage loan, you must be a French tax resident . As with any credit, your debt ratio is also studied. Your income must make it possible to repay the new credit while taking into account other current charges. If you want to get an idea of your debt ratio to check if you can support a new charge, you can use our simple and free debt ratio calculator . You just have to enter your income as well as your expenses and you get a quick simulation. The authorized debt ratio is 33%. If your current rate is 10%, your income allows you to bear an additional charge of 23%.
Another condition, the property to be pledged must belong to you in your own name or belong to an SCI (Société Civile Immobilière). In the case of the SCI, the banks generally require that all the partners of the SCI stand surety for the loan.
If you are not the sole owner of the property you wish to pledge, all the bare owners or usufructuaries must stand as mortgage sureties.
Can you take out a mortgage loan without income?
To get a mortgage , you must be able to repay the money borrowed. To verify this, the bank will analyze your financial situation. It is therefore necessary, if you apply for a mortgage loan, to receive regular income.
To find out how much it can lend you, the bank will calculate your borrowing capacity according to your expenses and your income while paying attention that your debt ratio after operation respects the 33% limit.