For those who dream of having their home, home ownership has become easy with home equity and lower rates – read more here
Homeownership has become easy with home equity. For those who dream of having a cozy home, the current rate cut is a boon to make this dream come true. The mortgage is granted to finance all or part of real estate work or the acquisition of real estate .
What is a mortgage?
The mortgage is a credit provided by a credit institution or a dedicated financial institution. It is granted over a long period with a simple or variable rate. The real estate loan allocated is fixed or variable amount depending on the case. To borrow from general banks for example, you need to provide a guarantee covering at least 10% of the loan in addition to costs related to notarial deeds and taxation.
The mortgage is governed by the law resulting from the directives 2014/17 / EU of the European Union. It exists:
- the amortizing loan with monthly maturity or conventional loan
- the fixed and invariant fixed rate loan
- the rate-adjustable loan based on a key rate plus the lender’s marginal rate
- the loan at a rate that can be revised on a fixed date. The revision is based on a financial index
- Framed rate loan, the value of which is known in advance for all or part of the term of the loan
- the floating rate loan, either upwards or downwards.
- the loan in fine whose capital is repayable at once at the end of the maturity. Interest is paid during the loan.
- the short-term bridge loan granted pending receipt of cash.
- repayable loan by level
- the flexible loan.
These credits are intended for the simple purchase, the construction, the rental investments, the operations of purchase / sale, the renovation, the purchase of balance etc.
Who to turn to if you need a home loan?
A specialized credit institution should be used to provide a wide range of financing tailored to various needs. It can provide variable rate loans that combine flexibility, attractiveness and very beneficial rate cuts.
This specialized credit institution is able to cover 100% of the amount of a project without asking for a personal contribution . You can with him, postpone the first monthly payments, adapt these monthly payments to your income or even postpone part of monthly payments in case of temporary difficulties. If you have other credits already contracted or if you want to contract, the financial institution can offer you a refund including other loans. Also, you can sell your property, keep the proceeds of sale and transfer the balance of the remaining credit on your new real estate acquisition.
In general, the financial institution asks you to take out insurance. Guarantees are either the conventional mortgage on real estate (obligatory for loans to the social accession), or the bond of a financial institution. This deposit is made in exchange for payment of contributions to the organization.
There are other guarantees like delegating your life insurance policy, your portfolio etc.
How to estimate the cost of your mortgage?
The cost of a home loan is composed of the credit rate, the cost of insurance (group insurance contract), guarantees and fees.
We distinguish the nominal rate which is the interest rate of the loan and the total effective rate (TEG) consisting of the rate of the credit, the expenses of study of the file, the notarial fees and the cost of the insurance if it is mandatory. The offers always mention the TEG.
Be aware that credit institutions can claim compensation when you anticipate repayment of a loan. They may also claim penalties for default, but by buying a floating rate loan, the prepayment penalty is often reduced to zero.