Property loan: the keys to successful funding
At MGM, you have found the apartment which lives up to all your expectations. If the search for the ideal property is now over, the search for the right funding is just beginning. From assessing your borrowing capacity to accepting the loan proposal, MGM will give you all the keys to funding your purchase in your best interests.
Make an accurate assessment of your budget and repayment capacity
Take the price of the apartment, add the notary’s fees and any extra fitting-out costs, deduct the amount of your deposit and you will have an idea of the amount you need to borrow. Comparing your income and monthly expenditure, without over-estimating the former or under-estimating the latter, will enable you to assess accurately the monthly amount you can commit to your purchase.
Bearing two things in mind:
While the payment of a deposit reassures the banks and enables you to reduce your borrowing, it reduces by a like amount any savings which could either earn income or provide a safety net. This is why it is important to consider its amount carefully.
A property loan is not only about the monthly payment, but also about the duration. Within the limit a 33% borrowing for property loans, the decision is yours. Ideally, the amount of the monthly payments to which must be added the outgoings and taxation related to the property should not exceed the rental the property can attract. In this way, a first time buyer can enter the property market funded by the rental income. Investors can self-fund a property asset.
WITH 50 YEARS EXPERIENCE IN RÉSIDENCES DE TOURISME, THE MGM GROUP, BOTH A CONSTRUCTOR AND MANAGER, IS AMONGST THE BEST PLACED TO GUIDE YOUR RENTAL INVESTMENT CHOICES AND ASSESS THE PROFITABILITY OF YOUR PROJECT.
Gather all the information before making a decision
Our advisors are not the ones paying, so it is in your best interests to begin by exploring all the property funding options available before even crossing the threshold of a bank.
Subsidised loans or bridging loans, repayment loans or interest only loans, fixed or variable rate? Find out about the different forms of loan and identify those which best fit your situation and your project. Consider looking at any assistance and subsidies available from local authorities or the ANIL (national accommodation information agency).
Talk to several lenders
Why? In the first place, because your bank is not necessarily the best placed to provide property loans. Some make it their speciality. Secondly, because the investment is substantial enough for you to take the time to make comparisons.
You don’t have the time? Property brokers have made it their business. Don’t hesitate to seek their help in finding the loan best suited to your situation. They know the banks and the different types of loan which often enables them to obtain more advantageous terms than if you deal with them directly.
Good to know:
Brokers are very helpful in seeking and obtaining the right loan and can renegotiate an existing loan or credit protection insurance.
Make a careful study and compare all of them!
When the offers have come in, the APR (annual payable rate) is not the only consideration. The lenders’ hobby horse can turn into a Trojan horse. Arrangement fees and early repayment charges, flexibility in delaying or altering instalments, the cost of credit protection insurance, the type of cover required are amongst the many aspects to be examined closely if you want to make your choice with full knowledge of the facts and their possible effects.
Credit protection insurance
Because it is taken out over a long period, a property loan must be supported by a death, disability and incapacity to work insurance policy and very often by loss of employment cover. The cost of these insurance policies can vary by as much as 100% from one provider to another, with very variable activation conditions. Quite naturally, the banks include their own insurance with their loan proposals, but you have the legal right to take out equivalent insurance with a provider of your choice, which is often cheaper. In the event, it is easier to take out the lender’s insurance, even if this means changing insurer later …within one year, permissible since 2014 under the Hamon law, or from the 2nd year on the renewal date as provided for in the Bourquin amendment.
Once the loan offer has been signed, the consumer protection legislation (article L. 312 and those which follow of the Code de la consommation) allows you a cooling-off period of 10 days during which you have the right to withdraw.