Financing Guide
Most banks offer mortgage loans, with the most “sophisticated” formulas developed and introduced to the market by specialized financial institutions.
The duration of these loans is freely agreed upon with the lending financial institution. It is commonly around 20 years but can now extend to 25-30 years.
Mortgage loan options are numerous, with each bank or financial institution offering its own. However, it is worth noting that in recent years, institutions have demonstrated skill in developing new solutions that better adapt to the specific circumstances of each borrower.
Mortgage Loan Rates
Fixed Rates
Fixed-rate loans, or constant-rate loans, are the most reliable “long-term” solution, offering no surprises. This rate will depend on several factors, including the repayment period. Monthly payments remain the same throughout the duration of your loan. This is the most common type of loan.
Adjustable Rates
Unlike fixed-rate loans, adjustable-rate loans are updated on specific dates outlined in the loan offers, based on changes in monetary index rates. The most commonly used monetary index is Euribor. These loans can be capped (the rate cannot exceed a maximum defined in the contract) or uncapped.
Mixed Rates
Mixed-rate loans refer to a type of credit that starts with a fixed rate for the initial years and then becomes variable for the remaining repayment period.
The Different Types of Mortgage Loans
In France, there is a wide variety of mortgage loan types, each tailored to the socioprofessional categories of borrowers. The main types of loans available to households include free-market loans, Social Homeownership Loans (PAS), Regulated Loans (PC), Home Savings Loans (PEL), Home Savings Accounts (CEL), Zero-Interest Loans (PTZ), and Complementary Mortgage Loans from Action Logement.
It is also important to consider subsidies granted by the ANAH (National Housing Agency), as well as certain local or departmental grants.
Finding the Best Loan Offer
A bank’s credit offer consists of an interest rate on the mortgage loan, an insurance rate, processing fees, and a guarantee. These elements are usually combined in the calculation of the APR (Annual Percentage Rate). Additionally, non-rate criteria such as the fund release time or the bank’s geographical proximity are also important.
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Preparing the Mortgage Loan Application
To create a mortgage loan application file, financial institutions will request various documents to assess your borrower profile.
The file will typically include the following items:
- Your identity: National Identity Card or Residence Permit for foreign residents in France.
- Purpose of financing: Property certificate, sales agreement, property description.
- Proof of income: Employment certificate, pay slips, social security statements, bank account statements.
This list is, of course, not exhaustive and will depend on your buyer profile.
Mandatory Mortgage Loan Guarantees
Since January 2018, there is no longer any obligation to take out insurance with the lending institution. Additionally, you have the right to cancel your insurance at any time. You can choose a more competitive insurance option, but its guarantees must be equivalent to those offered by the bank.
When reviewing your loan insurance, it is also essential to examine the guarantees included in your policy:
Death Coverage
Death coverage ensures that the insurer repays all or part of the remaining loan balance, depending on the coverage percentage chosen when signing the insurance contract, in the event of the policyholder’s death.
Total Permanent Disability (TPD) Coverage
This applies to a disability rate exceeding 66%. If the policyholder becomes severely disabled, the insurer repays the remaining loan balance.
Partial Permanent Disability (PPD) Coverage
This applies to a disability rate exceeding 33%. This coverage is not offered by all insurers and can only be subscribed to as a complement to Total Permanent Disability (TPD) coverage.
Total Temporary Disability (TTD) Coverage
TTD: Total Temporary Disability or Daily Allowances (DA)
An allowance whose amount is determined by the policyholder at the time of subscription, aimed at supplementing income in case of inability to work.
A medically recognized disability that renders the policyholder completely and continuously unable to engage in any professional activity generating income or profit due to illness or accident.
Total and Irreversible Loss of Autonomy (TILA) Coverage
This coverage is associated with death coverage. It is commonly referred to as 3rd Category Disability of Social Security (100%).
It refers to the total and irreversible inability to engage in any work or activity that generates income or profit and requires assistance from a third party to perform basic daily life tasks.
Additional and Optional Guarantees
Unemployment (or Job Loss) Coverage
Usually optional, this coverage applies under certain conditions, such as age and involuntary job loss. It typically comes into effect alongside unemployment benefits (e.g., ASSEDIC or equivalent). Benefits include partial coverage of successive loan payments, within certain limits and for a duration specified in the contract.
Resale Coverage
This is a contract designed to compensate for potential financial losses incurred by the policyholder or their beneficiaries in the event of the resale of the property within a specified time frame due to certain triggering events such as:
- Death (due to illness or accident),
- Disability (due to illness or accident),
- Divorce,
- Job loss following economic redundancy,
- Professional relocation, etc.
Simulate your loan
To calculate the monthly payments for a property according to your own criteria, please enter the amount of your contribution and the loan term in years that you are considering:
Non-contractual simulation. These results are provided for informational purposes only. They are automatically calculated based on simple assumptions and/or elements that you enter. They do not constitute a loan offer and do not bind the Carmen Immobilier group.
