When buying real estate with a mortgage, a personal contribution is often necessary. We generally speak of 10% of the amount of the transaction … Sometimes more. This can lead to a better rate. Discover our 5 tips for making a personal contribution and owning your home.
Do you want to buy real estate to own your home? A personal contribution of 10% of the purchase amount is often necessary. Here are our tips to help you save every month and build a sufficient cash reserve to buy !
What is the personal contribution for a mortgage?
The personal contribution is a sum of money that the purchaser has (or not), following a donation or investments on a livret A or a housing savings plan for example, is used to finance the acquisition costs also called notary fees and the fees of the real estate agent if there is one.
Is the contribution compulsory to obtain a mortgage?
Personal financial support is not compulsory. Some banks accept financing without contribution. This is called 110% real estate financing. That is, the bank will finance 100% of the operation + ancillary costs, so 110%.
If you do not have a personal contribution, it is better to inquire and contact a broker who is well established to be supported in this process (Vousfinancer.com, Cafpi or Meilleurtaux.com for example). Indeed, not all banks finance without a contribution. Those who accept it mainly finance first-time buyers and young workers who can more easily justify the fact of not yet having a personal contribution.
In all cases better to avoid bank overdrafts, especially if you have no financial contribution … because this element could work against you when applying for a mortgage.
5 tips for making a personal contribution
- Save a little every month by setting up automatic savings, for example on an A passbook, a Youth passbook, an LDDS passbook
- Put some money on a PEL. The money deposited into this banking product is blocked for 4 years. This will prevent you from being tempted to dig into it to pay for online orders or travel …
- Place your employee savings and unlock it for your acquisition
- Reduce unnecessary expenses (compare telephone subscriptions, repay your consumer loans and avoid easy payments)
- Shop around for assisted loans (Housing Action Loan, PTZ, PAS loan) … to boost your real estate purchasing capacity
In all cases you will have to justify the origin of your personal contribution.
Keep safe savings after buying real estate
The best advice, if possible, is not to invest all of your personal contribution in the operation. Better indeed keep security savings in the event of a financial glitch (the water heater that breaks, work in the condominium, the property tax that increases …) or to carry out work in your new home.
Take into account the costs associated with homeownership
The cost of mortgage
Finally, to estimate your borrowing capacity, you must respect the principle of 33% debt ratio relative to your income. That is to say that the burden of your future monthly payments should not exceed 33% of your income.
The interest rate and the insurance rate should retain your full attention since their amount amounts to thousands of euros over the total term of the mortgage. Obtaining a better rate by comparing banks is therefore an approach adopted by many buyers.
Expenses related to real estate purchase
Another important point, the share of expenses related to your purchase. Remember that you will have to pay the condominium fees (often high) if you buy a unit in a condominium and the property tax. These can represent several monthly loan payments in addition to your budget …
Amounts that can weigh heavily in your budget to which are added maintenance and energy consumption expenses. Hence the importance of informing yourself about these different amounts during your property visits. Most often real estate advertisements specify them.