Having the right borrower profile is not something you can improvise. In the context of a property loan, whether for the purchase or construction of a house, the more reassured the banks are, the lower the rate will be. So Maisons SIC, a company with 50 years of experience in building houses in the South West, gives you some tips for perfecting your good borrower profile.
Having a comfortable, fixed income and being in a relationship: an asset for a good borrower profile
For banking institutions, an ideal borrower is above all a client who presents solid guarantees of repayment. Financial stability is therefore an essential criterion for creating a good borrower profile.
This is why banks favor profiles whose income is regular and high. A borrower in Permanent, with several years of seniority in the same company, is considered a reliable candidate, which helps to present a good profile for borrowing. This professional stability reassures banks, because it limits the risk of default.
For people on precarious contracts (fixed-term contracts, temporary work), the situation is more complex.. However, borrow as a couple, especially when one of the two has a permanent contract, can considerably strengthen the file and therefore help to create a good borrower profile.
In 2018, only 1,7% of borrowers were on fixed-term contracts. But this figure rises to 4,9% when one of the partners has a permanent contract. total household income is a key indicator for banks, and borrowing as a couple increases the chances of obtaining credit on advantageous terms and of building a good profile for borrowing.
borrowers with comfortable incomes often benefit from the best rates on the market. With high incomes, they can negotiate loans at attractive rates.
However, even with more modest incomes, it remains possible to obtain a competitive mortgage loan.The key is income stability. and the ability to reassure the bank about your good borrowing profile and your long-term solvency.
To support you in this process, Maisons SIC can put you in touch with expert brokers, able to find the credit offer best suited to your profile and maximize your chances of obtaining the best rate by highlighting your good borrower profile.
A good borrower profile: stable and well-managed accounts
Banks are especially wary of haphazard account management.
Frequent overdrafts, payment refusals or unjustified consumer credits are perceived very negatively and can compromise obtaining a mortgage loan. These incidents, even if they do not necessarily reflect a lack of means, imply an additional risk for banks, which prefer customers with stable and well-controlled finances, which is a sign of a good borrower profile.
Conversely, regular savings, even modest, is an excellent asset to reassure financial institutions and to establish a good profile for borrowing. Putting aside €200 each month is better than one-off payments of €800. This demonstrates not only your ability to manage your finances, but also your potential to repay a loan over the long term.
Pay off your old loans and present bank statements without anomalies in the three months preceding your credit application. Impeccable management of your accounts and a sufficient personal contribution are guarantees of security for the banks, contributing to your good borrower profile. The more solid and well-organized your finances appear, the more you increase your chances of obtaining a loan on favorable terms.
- Also read : 4 tips for getting a good mortgage
What contribution/residual savings gives you a good borrower profile?
To obtain a mortgage, the personal contribution is an essential criterion for having a good borrower profile. This is the amount you invest in your project in addition to the amount borrowed.
In general, Banks require a minimum deposit of 10% of the total purchase price, in order to cover additional costs such as notary fees and guarantee fees. A higher contribution, around 20% or even 30%, can not only make it easier to obtain credit, but also improve the loan conditions, particularly in terms of interest rates.
Having a substantial contribution shows banks that you have the capacity to save and that you are committed to your real estate project. It also helps reduce the risk for banks, which then do not finance the entire value of the property. In some cases, for rental investments for example, it is possible to obtain financing without a contribution, called "110% financing", but this remains the exception rather than the rule.
What is residual savings and how can it help you?
Beyond the initial contribution, have residual savings is a real plus to reassure the banks. This saving, which corresponds to the money remaining after the deposit has been paid, serves as a safety margin in case of financial difficulties.
Banks particularly appreciate that this sum is equivalent to one year of monthly payments or 10% of the total amount of the project. It proves your ability to manage your finances and deal with unforeseen events, which can improve your file and allow you to benefit from more advantageous loan conditions.
Debt ratio, jump in charges, remaining to live: the effects on a good borrower profile
To obtain a mortgage, the debt ratio is one of the criteria most scrutinized by banks. It measures the portion of your net monthly income devoted to repaying your debts. Ideally, This rate must not exceed 33%.
The lower it is, the more stable your financial situation is considered, which constitutes a good borrower profile. Below this threshold, banks consider that you can repay your loan without compromising your financial balance. A higher debt ratio may be accepted, but only if your income is high and provides some security.
The jump of charges is another important element: This is the difference between your current rent and your future monthly mortgage payment.. If this jump is too big, it can signal a difficulty in assuming this new financial commitment. A reasonable jump in charges reassures the banks and shows that you will be able to adjust your budget without too much effort.
The remainder to live on, that is to say the amount remaining once all your fixed charges have been paid (credits, taxes, bills, etc.), is also a major criterion. It must be sufficient to cover your current expenses and allow you to put money aside for unforeseen events. A comfortable living expenses shows the bank that you can take on your loan while maintaining a decent standard of living and saving, which is an indicator of a good borrower profile.
Having a good debt ratio, a reasonable jump in charges, and sufficient living expenses are therefore essential for presenting a solid file to the banks.
A real estate budget and a coherent project to perfect your good borrower profile
To convince banks to grant you a mortgage, it is essential to present a coherent project aligned with your financial situation, which constitutes a good profile for borrowing.
If your income is modest, consider realistic projects : do not opt for buying a duplex in a popular area or for major work. Lending institutions are above all looking for solid guarantees. A project that is disproportionate to your financial means may be perceived as risky and could result in a loan refusal.
It is also important to think about the future resale of the property. Choosing a well-located house in a developing area can work in your favor in the event of repayment difficulties. The bank then considers that the property could be easily resold, providing an additional guarantee to your file.
Define a precise and realistic real estate budget is essential to reassure banks. Your project must be motivated and well thought out, with a clear estimate of your resources and repayment capacity. A budget that is too ambitious or poorly defined could, on the contrary, give the impression that you have not prepared your application well.
Banks also prefer projects where risks are controlled. Single-family home construction or projects requiring major work can be perceived as riskier, especially when the property does not yet exist. In these cases, going through a recognized builder or architect is often required to reassure the lending institution.
Urban artist the amount of your loan can influence the bank's decision. A loan of less than €50 is often treated as a consumer loan, while higher but realistic amounts are better perceived. Make sure that your application is aligned with your borrowing capacity and with a concrete and feasible project to guarantee a good borrower profile.
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To guide you through this process and maximize your chances of obtaining a loan under the best conditions, call on the expertise of Maisons SIC.
We support you in your real estate project from A to Z, helping you to develop a solid file adapted to your situation with our broker partners.
Contact us now to benefit from personalized advice and find the financing that matches your ambitions, while highlighting your good borrower profile.
