When establishing a mortgage, the banks study with the greatest care all the criteria in your file. Certain points are immediately unacceptable. Other criteria can lead the banker to make a distinction: thus, he will be able to compare the strengths and weaknesses of your file.
If, for example, you have a good saving capacity, your banker may reconsider the fact that your debt is a little high. In addition, some banks or credit institutions may have divergent opinions concerning your file: your loan request may be refused with certain institutions while others will unpack the red carpet for you. The criteria vary from one bank to another, so we advise you not to hesitate to multiply the requests for credit to compare the conditions which are proposed to you!
We have found five criteria evaluated by your banker to determine your profile, which we are passing on to you here to help you prepare your loan file.
1) Employment and income sustainability
This first criterion is judged to be decisive by credit institutions. It is subdivided into 5 parts:
- Very favorable: you have had a job (Permanent Contract) for more than a year;
- Favorable: You hold a permanent job and have between eight months and one year of seniority;
- Neutral: you have a permanent contract but only have between 6 and 8 months of seniority;
- Unfavorable: you have been on a permanent contract for less than 6 months
- Very unfavorable: you are on a trial period, have no job or are on a fixed-term contract.
Note that this criterion can only apply to employees, non-employees with specific criteria related to the risks of their profession. In general, it is easier for an employee to borrow than for a non-employee, the income of the former being considered more regular. The more legibility the banker has on your income, the higher the loan available to you.
2) Type of property
The type of property you choose is important for your banker, because the more interesting your investment, the more your banker will have guarantees that you can repay your loan (by seizing the property if you are not able to repay your loan.) Here again , 5 parts:
- Very favorable: if the property market is very dynamic;
- Favorable: if the real estate market is dynamic;
- Neutral: if the real estate market is stable;
- Unfavorable: if the property market is not very dynamic
- Very unfavorable: if the real estate market is inactive, or if your project requires a lot of work. The risk taken by the banker is maximum here
Bankers appreciate the dynamism of the real estate market according to the number of transactions recorded by notaries on property equivalent to yours.
3) Personal contribution
Personal contribution is, as we told you previously, important for your banker: it indicates your interest in the investment acquired. The bankers judge it according to 5 subdivisions:
- Very favorable: if you participate 30% or more in the purchase of the property;
- Favorable: if your personal contribution is between 25% and 30% of the value of the property;
- Neutral: if your personal contribution constitutes between 15% and 25% of the value of the property;
- Unfavorable: if your personal contribution constitutes only 10 to 15% of the value of the property;
- Very unfavorable: if your personal contribution is 0%, if you have no means of paying the notary and / or agency fees.
The percentages that we have indicated to you here include the notary and guarantee costs, which are often at your expense and cannot be covered by your loan. The notary fees and guarantees amount to 6%, in general, of the value of the property. If you are young, the personal contribution criterion may be subject to some exceptions. In addition, this criterion does not apply to rental transactions, work loans or second homes if you also own property or furniture.
4) Savings capacity
Your credit institution will take your savings into account to determine your level of solvency. This criterion is divided into 5 parts:
- Very favorable: if you are able to keep more than 25% of your income over a period of three years;
- Favorable: if you have been able to set aside 10 to 20% of your income over a period varying from 2 to 3 years;
- Neutral: your savings capacity is then considered to be average if you have saved 10% of your income in 2 years;
- Unfavorable: you then have a very low savings capacity, unable to secure payments for your other installments in advance.
- Very unfavorable: your savings capacity has not been proven. Your savings are unavailable.
Savings are built up either from regular payments (salaries, monthly payments, etc.) or from one-off payments (Company savings plan, bonuses, bonus, 13th month, etc.)
Your current debt is a fairly strong indicator for your bank; it determines whether or not a new loan can be charged to you without worries. Again, it is subdivided as follows:
- Very favorable: your debt represents less than 25% of your income;
- Favorable: your debt corresponds to 25 or 30% of your income;
- Neutral: your debt is 33% or less;
- Unfavorable: your debt varies between 35 to 40% of your income;
- Very unfavorable: your debt imputes more than 40% of your income.
Your debt will nevertheless be restated by the banks in view of certain criteria, such as rental income, your borrower profile (with future changes in your income), family allowances received …