Monthly Archives: February 2020

Uncategorized

Social Accession Loan: a loan with APL.

Depending on the nature of their real estate project, their means test and sometimes their profession, borrowers can claim several types of mortgage. The Social Accession loan, for example, is aimed at households with modest incomes to help them gain access to property, for the acquisition of new or old housing (with or without work), while allowing them to touch the APL. Explanations.

What is the Social Accession loan?

What is the Social Accession loan?

The PAS, or Social Accession loan, is an assisted mortgage. Its objective: to support households wishing to access property, as soon as their income is considered modest and the housing acquired will serve as their main residence. To this end, the PAS allows borrowers to finance their entire purchase transaction, excluding notary fees, with a repayment duration staggered between 5 and 25 years (and up to 35 years in some cases).

In addition, the PAS loan automatically opens the right to the APL (Personalized housing assistance). So the monthly payments are calculated according to the housing aid to which the borrower can claim. And that it is therefore easier to obtain your mortgage if you already touch the APL.

The Social Accession loan can finance three types of real estate operations:

  • An acquisition in the new (including to buy land and build);
  • An acquisition in the old (without work obligation);
  • The financing of energy improvement or renovation works (for a sum greater than $ 4,000).

Benefits of the Social Accession Loan

Benefits of the Social Accession Loan

If the Social Accession loan is attractive, it is because it gives entitlement to several advantages. The first of these is the possibility of receiving APLs during the repayment period of the credit, which makes it possible to add a non-negligible monthly sum to your loan.

The second advantage is lower costs: a PAS loan comes with reduced notary fees and application fees of less than $ 500, whatever the case.

Who can benefit from the PAS loan?

Who can benefit from the PAS loan?

Are concerned by the Social Accession loan French households (or foreigners as soon as they are in possession of a residence permit) wishing to finance the acquisition of a main residence, and benefiting from income below certain ceilings of resources.

On 1 January 2016, the ceilings in question were fixed as follows:

  • In zone A: from $ 37,000 (for one person) to $ 118,400 (for 8 or more people);
  • In zone B: from $ 30,000 to $ 96,000;
  • In zone B2: from $ 27,000 to $ 86,400;
  • In zone C: from $ 24,000 to $ 76,800.

(These ceilings relate to taxable income, after deductions and pensions. The area to be taken into consideration is that of the property that the borrower plans to buy.)

Finally, there is also a low ceiling. Indeed: the income declared must not be less than 1/9 th of the total cost of the credit at the time of the Social Accession loan request. Thus, to obtain the sum of $ 200,000, you must have declared at least $ 22,222.

Note that only banks and lending institutions that have signed an agreement with the State are authorized to offer a PAS.

Loan without contribution

Loan without contribution

The Accession Sociale loan can finance the entire real estate transaction and up to 110% of the necessary sum, in the event that the borrower does not have a personal contribution. Please note: the loan does not cover notary fees.

But beware: this is only possible if the lending institution deems the borrower able to repay his credit without failing. This implies two things: only people with a stable professional situation can benefit from it (employees on permanent contracts in particular); and the borrower must have a good financial profile (no consumer credit in progress, good savings profile, etc.).

PAS is no longer reserved for main residences

PAS is no longer reserved for main residences

Basically, the Social Accession loan only concerns the acquisition of a main residence. However, the rule changed slightly in 2016: since then, it has been possible to change the destination of the accommodation acquired through a PAS loan and to make use of it other than that of the main residence (rental, commercial or professional premises, second home, etc.). However, this possibility does not open until 6 years after the date of release of funds.

You should also know that the rental of the property is authorized before the expiration of 6 years, under certain conditions:

  • If the owner or one of the co-borrowers cannot live in the accommodation following a death, a divorce, the dissolution of a PACS or a professional transfer (in this case, the place of the activity must be separated from the property of at least 50 km, or cause travel time greater than 1 hour 30 minutes).
  • If the owner or one of the co-borrowers is disabled, is experiencing a period of unemployment, or if he bought the property with a view to his retirement or a return from abroad (DOM- TOM included).
  • To these conditions, two others must be added concerning the rental: on the one hand, it must be empty (no furnished or seasonal rental financed by a PAS loan); on the other hand, the tenant’s rents and resources must remain below a ceiling determined by the National Housing Agency.

By respecting these prerequisites, it is possible to rent out accommodation purchased via a Social Accession loan.

Uncategorized

Home loan: what type of home loan should you choose?

Are you considering taking out a home loan? Depending on the nature of your project, the type of housing targeted and your situation (personal, professional, financial), you will be able to choose between different types of loans. Indeed: there is not “one” housing loan, but a multitude of loans, adapted to the status and needs of the borrower. This section of the practical mortgage guide will allow you to choose the best type of loan – as well as the ideal rate – to complete your transaction.

Choose your type of housing loan

Choose your type of housing loan

What type of home loan should you choose? Banks (and other lending institutions) offer several possibilities for taking out a home loan. This differs according to many criteria specific to the borrower:

  • The nature of its acquisition project (buying a main residence, making a real estate investment);
  • The type of property he wants to buy (new or old);
  • Its overall situation (professional status – certain credits being accessible only to certain categories of employees, for example the official house loan – and financial, etc.).

Here is everything you need to know about your mortgage and the different possibilities available to you.

Classic mortgage loans

Classic mortgage loans

In the conventional home loan family, the best known is probably the amortizable loan. The monthly installment paid by the borrower is divided in two (principal and interest). It allows him to amortize part of the capital obtained (hence the term “depreciable”) while paying the interest on the home loan as and when. The credit is settled at maturity, after a number of years specified in advance.

This type of home loan can take several forms, in particular that of the smoothed loan (or with stages). This formula arranges the monthly payments of the house loan according to other parallel loans, so as to keep a constant reasonable debt ratio. The modular loan, for its part, gives the opportunity to increase or reduce its repayments in order to accompany changes in its income over time. Finally, the mortgage is a credit secured by a mortgage.

The bridging loan only intervenes in the case of a crossover between resale and acquisition. This type of home loan allows you to buy a new property without having to wait until you have sold the previous one. The principal is repaid when the borrower has received the fruits of his sale.

As for the credit in fine, as its name suggests, it consists in repaying the entire capital at maturity. Throughout the term of the loan, the monthly payments paid include only the interest and borrower insurance costs. It is the savings that will make it possible to settle the loan at the end of the operation. The advantage of this arrangement is that it is supported by low monthly payments and therefore weighs little on debt. It is ideal for rental investment.

Finally, let’s finish with the “no contribution” housing loan. It consists of obtaining a mortgage without having to pay a personal contribution – this percentage of the total sum generally claimed by the banks. It is also called “100% loan” or “110% loan” (because it includes ancillary costs).

Note that, for the past few years, banks have given borrowers the possibility of taking out a home loan over 30 years (compared to a maximum of 20 or 25 years previously). This type of housing loan relieves the burden of excessively high monthly payments, but it has a major flaw: considering its duration, it is very expensive!

Additional aid for housing loans

Additional aid for housing loans

These conventional loans can be backed by so-called “regulated loans”, eligible under certain conditions. The best known of these is undoubtedly the PTZ, or zero-rate loan: assistance with home ownership which aims to simplify a first acquisition of a main residence. It complements an existing housing loan. Its variant called “eco-PTZ” is intended only for financing energy renovation works.

The social accession loan, or PAS, is a housing loan granted by certain banking establishments in collaboration with the State. Based on several criteria, it is possible through this to finance all or part of the total cost of a main residence, over a maximum of 30 years. In the same vein, the loan under agreement makes it possible to cover up to 100% of the sum necessary for the acquisition of a principal residence, except that it is not subject to means test and that he is entitled to housing allowance.

In addition, there is a very specific type of home loan, set up by certain communities. This is the case of the Paris housing loan, reserved for residents of the capital wishing to buy in their city. Or the “local authorities” credit, through which a community itself grants a loan for the acquisition of new or old housing.

Professional loans

Professional loans

Certain categories of employees can benefit from a very specific type of housing loan, called a “professional loan”. These may include:

  • Employer loan, or “1% employer”, which is intended exclusively for employees of private companies with more than 10 employees.
  • Official loan, a mortgage offered only to public service employees by certain banks.

Other types of loans

Other types of loans

Finally, let us cite some singular (and rarer) forms of mortgage loans. For example, real estate leasing, which concerns only goods for professional use: it is the bank which acquires the property and makes it available to its client, against payment of rent and option to purchase in the future.

Another example: the pension fund loan, thanks to which an employee or an executive can be helped to finance his main residence by his pension fund, against a minimum contribution period. And only for small sums.

Important : be aware that it is possible to combine several types of housing loan. Check with your bank for all of your available options.

Choosing your borrowing rate for a home loan

Choosing your borrowing rate for a home loan

Beyond the different types of loans available, it is also necessary to define another important point of housing credit: the rate. Let’s go into detail.

Fixed rate housing loan

Fixed rate housing loan

The interest rate, fixed during the establishment of the home loan, does not change throughout the duration of the loan. So that the borrower knows in advance the amount of monthly payments to come as well as the total cost of the loan, the rate remaining fixed including if he chooses to modify the duration of the loan or the amount of the payments. One also speaks about rate APR, for “annual effective annual rate”.

Note that the fixed rate is most often chosen for a housing loan (at least when it comes to financing a main residence).

Variable rate home loan

Variable rate home loan

As the name suggests, the variable rate is subject to market oscillations. In this formula, the rate negotiated between the borrower and the establishment corresponds to a value determined at a time “T”, that of the establishment of the housing loan. Then, this rate changes according to the variations of a benchmark index – generally Cream Bank, the interbank rate which is authentic within the USD zone.

The rate variation is applied at regular intervals, according to a calendar fixed in advance, for example every 3 or 6 months. The only thing that stays the same is the bank margin applied directly to the interest rate.

This type of rate has major advantages and disadvantages. It allows you to benefit from downward changes in the borrowing rate, without having to renegotiate. In addition, the base interest rate is often more attractive than in the case of a fixed rate. However, depending on the market, this solution can prove to be expensive: if the rate increases significantly over a long period, the borrower will end up paying his housing loan much more expensive and / or by increasing his loan duration.

The variable rate “capped”

The variable rate "capped"

Finally, there is a solution that comes between the fixed rate and the variable rate. This is the “capped” variable rate, the principle of which is simple: the borrowing rate determined at the outset may vary, but within the limits of a ceiling fixed with the lending institution (or “cap”).

This ceiling can relate to the rate (with more or less X points of variation) or to the duration of the housing loan (with more or less X years of oscillation). Or a mixture of the two possibilities. Even if the total cost of the mortgage is not known in advance, the fact remains that this type of rate allows you to take advantage of market conditions without taking too many risks.

Uncategorized

Smoothed loan: a mortgage loan repaid in stages.

The smoothed loan, or loan with repayment stages, is a form of amortizable credit. In this, it is also one of the various types of mortgage that a borrower can claim to finance his home acquisition project. This land loan makes it possible to contract a mortgage while pursuing the repayment of advance credits, and preserving an equal debt throughout the amortization period. explanations

How does a smoothed loan work?

We speak of a smoothed loan or a landing loan in the sense that this option makes it possible to “smooth” (arrange) a classic amortizable mortgage when the borrower already has repayments in progress, so as to pay only a monthly payment single and global rather than several separate monthly payments.

Let’s say that a borrower wishes to take out a mortgage to acquire a principal residence. At the same time, this borrower is already repaying two loans – a vehicle loan and a consumer loan – which weigh heavily on his debt ratio. The smoothed loan then allows him to reduce the share of amortization of the monthly payments to be reimbursed for the mortgage over a given period, until he has settled his outstanding loans and can therefore dedicate his entire debt capacity to repayment of the mortgage.

Example: the monthly mortgage payments will start at 500$ , then increase when the first loan is settled (passing to 750 $), and again when the second loan is finished – hence the name “stage loan”. The borrower will then reimburse $ 1,000 in monthly payments up to the balance.

At each level, the monthly payment increases and the amortization of capital increases. This amortization is enabled by an reassessment of the upward monthly payments on the smoothed loan.

When can you apply for a landing loan?

When can you apply for a landing loan?

The smoothed loan is very useful for a borrower who does not wish to handicap his debt capacity because of current loans.

However, this is not the only reason why one can apply for this type of loan. The landing loan applies equally to first-time buyers who, in addition to their mortgage, must take out a second loan – for example a regulated loan (1% employer) or a loan to carry out work.

Be careful, however: if the smoothed loan allows you to calmly approach the delicate periods of repayment, in the case of additional loans, this advantage often has a high cost. The granting of smoothing by the bank is in fact accompanied by substantial interest rates. Before making a decision, calculate your loan smoothing with a mortgage loan simulator.

Uncategorized

Bridge loan: a method to buy before selling.

If the amortizable loan remains the most common type of mortgage, there is another one which is very successful: it is the bridging loan. A practical mechanism, which allows an owner to buy his new main residence without waiting to have sold the previous one, thanks to a loan of a very short duration (1 to 2 years). But how exactly does this bridge loan work? And what are the risks?

What is a bridging loan?

What is a bridging loan?

A bridging loan is a special type of loan that allows a homeowner to buy new property before selling their current property. The purpose of this mechanism is therefore to finance a purchase so that the borrower can benefit from the good opportunities of the real estate market without having to find a buyer beforehand. If the newly acquired property is cheaper than the estimated sale price of the first home, this is called a “dry bridging loan” (the rate of which may be higher).

The principle is simple: the bank advances the funds necessary for the acquisition of a new main residence, while waiting for you to sell your house or apartment, and you can settle the real estate bridging loan thanks to the fruits of the transaction . The funds in question represent between 50% and 80% of the value of the property concerned. If you have any money left after the credit is paid off, you can either save it or use it to pay off part of your new loan that is amortized early.

Of course, obtaining this type of loan is subject to the presentation of collateral. It can be a mortgage, an IPPD or a surety – knowing that the option chosen must cover both the amount of the bridging loan and that of the conventional mortgage, if you have taken out one.

How long does a bridge loan last?

How long does a bridge loan last?

A bridging loan is a short-term loan, with a maximum duration of 24 months, the time to sell your property. But it can also be shorter, around a year.

Of course, the object of the game is to be able to settle your bridging loan as quickly as possible. Because even if the repayment of the capital is made only once the sum is raised, you will still have to pay monthly installments composed only of interest (we speak of “partial deferral”). In short, the faster you clear your bridging loan, the less interest you will pay.

However, you have the option of paying the accumulated interest only when you sell your first property – this is called “total deferred depreciation”. This solution avoids adding the repayment of the interest on the bridging loan to the costs already incurred (maturity of the housing loan for sale and maturity of the credit for the newly purchased property), and allows you to lighten your budget.

Please note: a real estate bridging loan must be repaid on time

Please note: a real estate bridging loan must be repaid on time

Insofar as a bridging loan is a very short-term loan, you agree to repay it in full before maturity. From the signing, you therefore have a maximum of 24 months to sell your first property and thus settle your credit.

Now what if you are late? In this case, you can negotiate with the lending institution to:

  • Extend the real estate bridging loan (generally for one year);
  • Transform the bridge loan into a traditional amortizable loan.

In the absence of agreement, the bank may seize the property offered for sale or the newly acquired accommodation. Before getting there, however, ask yourself why you still haven’t found a buyer for your home: is the price too high compared to the market? Is it necessary to do some work?

This will ensure that you pay off your loan on time!