You plan to invest in real estate or acquire a home, the mortgage is the financing that will allow you to achieve your dreams. The home loan also makes you enjoy a loan at the best rate and a variety of formula tailored to your specific needs. It is however essential to know some notions on this type of credit before subscribing to it to benefit from the best offers. What is a mortgage? What are the operating principles? What are the procedures to follow?
What is the mortgage?
Real estate credit is an amount granted by a lending institution to finance a real estate project such as a home purchase, a renovation project of a house or apartment. The borrower undertakes to return the loan plus interest in a shorter or longer period depending on its availability. The value of the monthly payments varies according to the interest rates imposed by the loan bank. Thus, it is essential to make a comparison of credit institution to find an offer at the best rate.
What are the conditions for subscribing to a mortgage?
Like all loan categories, real estate loans have certain conditions of the borrower to ensure that the borrower can fully honor his / her commitment. Thus, the borrower must meet certain criteria and provide some formalities. To be eligible for a home loan, the client must have a stable and regular source of income, not exceeding a debt ratio of 33% in relation to his capital. As for the formalities, these relate to the identity and the different files attesting the entry of agent of the borrower. In such circumstances, it should be noted that public servants have many advantages in obtaining a mortgage.
What are the operating principles of mortgage lending?
When you subscribe to a mortgage, we always look for the lowest interest rate and with flexible payment terms that adapt to our feasibility. Here are the main categories of home loans to which you can subscribe:
- the amortizing loan which consists of repaying the loan plus interest according to a depreciation schedule. This table contains, in particular, the value of the monthly payment and the interest due, agreed upon and approved before the contract is signed.
- the progressive loan is a credit at an ascending rate, at the beginning the interest rate is at the lowest and as it increases. Unlike progressive lending, there is the declining loan that works in reverse.
- the loan to palliate smoothing is to pay first of all the interest and then follows the loan itself.
As this is a long-term contract, the borrower is asked to complete a borrower insurance contract, a reliable guarantee for him and the lending institution. This insurance makes it possible to solve the unpaid remains in the event of a disaster that puts the borrower in a state of incapacity. The insurance contract is terminated once the full mortgage is paid.