To buy a house or an apartment, Apply for a mortgage from a bank is almost a must. Update on the steps to apply for a home loan: calculate your borrowing capacity, search for financing, prepare your file, and get an agreement in principle and the release of funds.
Step 1: To Apply for a mortgage – Define your project and calculate your borrowing capacity
To properly start your real estate purchase, the borrower must begin by defining his project and determine the budget at his disposal. Before going further, the future owners must know in which direction they are going: do they want to buy a house or an apartment, do they prefer old or new housing, are they ready to engage in work … Without forgetting the essential: location of the property, number of rooms, surface …
Above all, applicants for purchase should not wait to meet a bank advisor to calculate their budget envelope. To put the project on track, it is important to know its financial means, such as the mobilizable personal contribution as well as the capacity of borrowing and indebtedness. Proceed in this way makes it possible to quickly realize if the purchase is possible or if brakes (debt too high, remains insufficient to live…) must be lifted before they can continue.
To find out more: Apply for a mortgage
At this stage, borrowers can already make a free simulation on the Internet to better understand their budget or directly call a credit broker who will take care of the calculations.
Step 2: find a bank to finance your mortgage – Home loan online
The search for a bank financing starts once the borrower has found his happiness and signed a preliminary sale contract (reservation contract, promise or compromise of sale). This document must specify the time allowed to obtain the mortgage (45 days or more in general): if the buyer does not receive a positive response, he can cancel the transaction within the time limit given this condition precedent.
To carry out his research, the purchaser can explore several ways. If he has good relations with his bank and his advisor, he can naturally turn to him. If not, or if he is looking for optimal financing conditions, he can send his loan application to other institutions to find the lowest rate. With this in mind, he can use the services of a mortgage broker, specializing in negotiating the financial package most interesting for the borrower. Therefore, the preparation of the loan file starts with the broker, before having met the bank: the intermediary can in particular direct the borrower towards aids to the purchase of real estate, like the loan with zero rate (PTZ) or Social Accession Loan (PAS) , and submit several loan insurance offers.
If he does not seek the services of a broker, the borrower can (and should) inquire for himself on these matters. At the latest, he will approach them with the bank advisor during the first appointment and the transmission of his file.
To know: brokers and banks propose to carry out simulations of financing during the various appointments, in order to calculate more precisely the purchasing capacity.
Step 3: Prepare your file and your appointment with the bank for your loan application
It’s the D-day, the first contact with the bank and mounting the file for borrowers who have not gone through a broker. To facilitate their efforts, they must ensure that their file is complete and “cleanest” possible (no bank overdrafts, debts not reimbursed…)
To go further: How to build your loan file
It is during this meeting that several crucial parameters of the credit will be fixed as:
- The type of loan and financial arrangement (single or multi-line loan with different durations, assisted loans and deferred repayment …)
- The interest rate (fixed or variable)
- The repayment period of the loan.
- The Amount of monthly repayment and depreciation schedule (schedule of monthly repayments of principal and interest from start to end of loan)
- Loan insurance
- Credit guarantee (surety bond, mortgage, lien registration) of deniers).
Once the file is completed, the bank advisor transmits it to his superiors so that it gives its agreement in principle. In order to decide whether this agreement is granted or not, it evaluates the file according to specific criteria (this is called “scoring”) and is specific to each institution. This is why a bank may refuse a file while another will validate it and grant the loan: hence the importance of visiting the institutions.
Similarly, the borrower’s file passes into the hands of the designated bonding company, if any, to guarantee the loan, which must also agree to validate the loan application.
Step 4: Get an agreement in principle from the bank and within what time frame
The borrower must wait for some time (ten days to three weeks in general) before getting the answer from the bank. In the best case, it agrees in principle: in concrete terms, this means that the buyer has obtained its financing and should be able to conclude its acquisition, except in special cases.
Attention: the bank can agree in principle with reservations and not grant the loan if the reserves in question were not lifted in time by the borrowers (signing a contract of employment for example). Similarly, the loan offer may be invalidated after the agreement in principle when the purchase is not completed within four months or if the financial package is undermined (not obtaining loans assisted for example).
The loan offer is then sent to the borrower by registered mail. Before signing, he must observe a reflection period of ten days. It can thus return the signed loan offer as of the end of this period (eleventh day from the reception). If the referral is not immediate, he must take action before the expiry date of the indicated offer.
Other steps are to be taken at this time for borrowers who have not used their traditional bank. Most often, the lending institution will request the opening of a current account or the subscription of a savings product in return for the loan.
Step 5: release of funds for his real estate purchase
To finalize the purchase, the borrower must sign the notarized deed of sale. Before that, he sends the bank a request to release the funds (or call for funds) so that the loan amount is paid into a bank account in the name of the public officer. In this way, the money will be available at the conclusion of the purchase and the notary can transfer the amount of the price to the seller’s account.