To properly negotiate a home loan, the buyer borrower should not only think about the borrowing rate. He must also bear in mind the ancillary costs, such as the bank’s application fees.
Reducing them will make it possible to obtain a more advantageous annual percentage rate (APR). At the end of the day, a saving of several thousand euros!
Negotiate your mortgage rate
To get a good real estate rate, you still need to know the average rates . This is the basis ! You must therefore study the banking market to determine the average rates applied to your borrower profile and your real estate purchase project.
The borrowing rate varies according to:
The stability of the professional situation : the banks seek to control the risk of default in the repayment of the loan. They believe that a borrower on a permanent contract or a civil servant will be less likely to see his financial situation deteriorate;
The borrower file , with income and personal contribution;
The loan period : the shorter the repayment period , the more advantageous the interest rate, and vice versa;
The real estate project : some lending institutions apply a premium for the purchase of real estate intended for rental investment;
The economic context and the rates at which credit organizations lend money to each other;
The evolution of the key rates of the European Central Bank.
The negotiation of the real estate rate is therefore based on a detailed knowledge of these factors, at a given moment.
Namely : the nominal rate is often very attractive. To compare the rates, you must rather take into account the APR, which reveals the total cost of the mortgage, ancillary costs included.
Negotiate filing fees
You will have to pay an application fee if you accept a loan offer from a bank. On average, they are around 1% of the capital borrowed.
Negotiating administration fees is possible, in order to reduce the APR. Often, loan brokers, who manage a large volume of files, manage to obtain a reduction or even their elimination from partner banking institutions.
Negotiate the borrower insurance rate
Obtaining a mortgage is correlated with taking out loan insurance . Without this precious sesame, no loan!
Since the Lagarde law of 2010, you have the choice between two formulas: the bank group contract and the delegation of insurance to an external insurer.
Generally, when negotiating the mortgage, you almost feel obliged to choose the group contract. If only for lack of time! It is recalled that on average, the duration to find a loan and insurance offer provided for by the sales agreement is between 45 and 60 days.
All that remains is to change insurance during reimbursement, if the negotiation of the rate has proved disappointing. Until 2022, you could change insurance:
On each anniversary date of the contract once the first year has expired ( Bourquin amendment ).
Since the entry into force of the Lemoine law , you can now change insurance at any time, without costs or penalties . Ideal for renegotiating your insurance rate!
Negotiate the removal of IRAs
Resale of the main residence or other accommodation: paying off your home loan early entails the payment of early repayment penalties or early repayment indemnities (IRA). Their amount is:
3% of the capital remaining due before repayment;
6 months of interest on the capital remaining due before reimbursement.
When negotiating your home loan, it is in your best interest to negotiate their removal with your banker!
What are the arguments for negotiating a mortgage?
To successfully negotiate your mortgage, you need solid arguments. We explain which ones to put in the balance to succeed in your negotiation.
A high personal contribution, to obtain a good real estate rate
The personal contribution is the savings that you can inject into your acquisition . Unless you have an excellent profile (very high income and co-payments, substantial real estate and financial assets), it is quite difficult to borrow without contribution .
Intended to cover notary fees and guarantee fees, the personal contribution must be at least 10%. But if you have the possibility, increase this amount to 20 or 30%. This is an excellent argument for negotiating your home loan and getting a good rate. A higher contribution can also make it possible to reduce the duration of the loan, and therefore to reduce the rate.
But money does not grow on trees (alas), how to increase your personal contribution? Several avenues can be considered:
The family loan (ideally without interest) or the family gift ;
Assisted loans : the zero rate loan (PTZ) is sometimes considered as a contribution by some banks. Otherwise, the Action Logement employee loan can increase the amount of the contribution;
Retirement or company savings : it can be released if your project concerns the acquisition of the main residence.
To know: among the loan guarantees , you have the choice (or not) between suretyship by an organization , mortgage and privilege of lender of money . The first formula is clearly the most advantageous. Not only is the cost of the guarantee the lowest (1.2% of the capital borrowed), but in addition, you will recover part of the sums paid if you have not had a repayment incident.
Control your debt ratio to negotiate a mortgage
For a long time, the 35% debt ratio was a simple recommendation. Since a decision of the High Council for Financial Stability (HCSF), it is binding on banks.
They retain the right to derogate from this rule for 20% of the quarterly production of loans. With priority given to first-time buyers and the purchase of the main residence.
The remainder to be paid is an indicator of the standard of living . It refers to the money available once the monthly loan payments, insurance premiums and all your charges have been paid. The larger it is, the less risk the bank has of you defaulting on your loan.
If your remaining life is more than 800 euros for a single person, or 1,200 euros for a couple , then you have a strong argument for negotiating your mortgage.
And by borrower profile, we mean managerial qualities . As you can imagine: banks prefer cicadas to ants. To determine how you manage your money, they ask you to produce your latest account statements.
To be able to negotiate the mortgage, you must not have been overdrawn during this period. Even if the overdraft is authorized! If you have fallen below zero, we recommend that you postpone your purchase for one, two or three months.
What arguments to renegotiate your mortgage?
You are already repaying a mortgage, but you want to renegotiate. Above all, check that the operation is really advantageous . Because you will pay IRAs (unless you had negotiated them), repay application fees and guarantee fees.
This is the basis. Compete with banks to determine which gives you the best rate. Go see your banker and explain to him that if he wants to keep you in his client file, he must agree to lower the borrowing rate.