Having a personal contribution makes it possible to negotiate better mortgage terms by creating a “balance of power” with the bank. This, however, depends mainly on the amount of capital you bring in your real estate project.
It does not matter whether you use the money in full or not. Nothing prevents you from placing part of it and the bank will “appreciate” that you entrust it with capital.
Simulation of a real estate loan with contribution
If you have what to finance the ancillary costs
If you are a young person working as a first-time homeowner and your personal contribution is limited to covering notary and guarantee fees, consider highlighting your status as an investor. The bank will appreciate recovering a client who knows how to manage his budget and who is able to release a savings capacity.
Be aware that the risk analysis service attaches great importance to the good performance of the current account of the borrower. Make sure it is regularly credited at the time you make your request.
All banks are banking on the potential of their young customers and real estate credit is a unique opportunity to create a business relationship that may last 20 or 25 years.
Finally, some of them have specific offers that they reserve for first-time buyers with a preferential interest rate and a credit insurance cheaper, more in relation to their age and sometimes as free of charge.
If your contribution covers the additional costs of 10% to 20% of the acquisition
In addition to the financing of ancillary costs ( notary and guarantee fees ), some banks require borrowers a minimum contribution equivalent to 10%, sometimes 20% of the purchase price.
In return, these organizations offer excellent rate conditions and often provide quality service.
If you are in this case, show yourself demanding on the quality of the bank proposal. Be aware that you are a valued customer of banks because you have a low level of risk. It’s up to you to take advantage of this balance of power.
If your contribution exceeds 50% of the purchase
You are the customer that banks are looking for first. The one for which they are most inclined to make efforts. You should benefit from a particularly advantageous interest rate because the bank will agree to trim its margin on the mortgage.
But your requirement should not stop at the single credit rate. It is absolutely necessary to negotiate each point of the loan, that is to say the amount of the fees that can even be removed and the penalties in case of early repayment.
Banks typically charge interest for six months in the event of early redemption by the borrower, which is capped at 3%. Even if they are reluctant to negotiate these penalties, it is quite possible to “develop” them, that is to say to make them degressive in time.