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From January 1, 2022, the conditions for granting mortgages are drastically stricter. Indeed, the Haut Conseil de la stabilité financier (HCSF), the supervisory body responsible for overseeing the entire French financial system, which aims to preserve the stability of the financial system so that it can support economic growth, has took over the subject of the conditions for the granting of real estate loans. This organization, which establishes the framework of bank loans and the criteria for accepting loans, has therefore tightened the screws. Under what conditions can we borrow today? What are the rules to follow to have your mortgage file accepted? Discover in this article our 3 tips to put the odds on your side.
An effort rate of 35% maximum
Previously, we used to say that the monthly payments of the loan must correspond to a third of the income of the loan (s), which was the case before January 1, 2022. But now the ratio of the maximum debt must not exceed 35% of the net monthly income before taxes, that is to say a little more than a third of the income.
Note, however, that this amount now also includes the borrower’s insurance, which in fact is more restrictive for borrowers who could once go into debt up to 33% without counting mortgage insurance.
A credit period less than or equal to 25 years
Another change in 2022: the duration of the mortgage has been reduced. Indeed, the maximum duration of the credit imposed by the HCSF is now 25 years. However, some exceptions exist for real estate loans for sale in the future state of completion, or Vefa, and contracts for the construction of individual houses. For all these special cases, the maximum duration of the loan is now 27 years.
It should be noted that this increase to 35% maximum of the effort rate and the reduction of the duration of the mortgage to 25 years is an obligation for the banks that must imperatively apply these criteria to 80% of their file. 20% of the credit offers issued per quarter can derogate from this rule, but be careful, 80% of this margin of flexibility allowed must be aimed at buyers of main residences and 30% of them must be buyers for the first time . The room for maneuver of the banks is therefore very small.
Also read: Becoming the owner of your property: what it really costs you
A contribution to cover at least notary and agency expenses
Have these new provisions caused an upheaval in the granting of mortgages? Not really since the banks have already often applied these eligibility criteria and these measures have been announced and planned.
Remember all the same that banks are more and more attentive to the contribution that must cover both agency fees and notary fees, and also ideally part of the sale price. Indeed, the greater the contribution, the shorter the duration of the loan and the less will be the amount borrowed, which makes it easier to be under the fateful bar of 35%.