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Since January 1, 2022, the conditions for granting mortgages have tightened drastically. Indeed, the High Council for Financial Stability (HCSF), the supervisory body responsible for overseeing the French financial system as a whole, which aims to preserve the stability of the financial system so that it can support economic growth, took up the subject of the conditions for granting real estate loans. This body, which sets the framework for 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
First, we are used to saying that the monthly loan payments must correspond to one third of the income of the borrower(s), which was the case before January 1, 2022. But now the maximum debt ratio does not must not exceed 35% of monthly net income before taxes, i.e. a little over a third of income.
Note, however, that this amount now also includes borrower insurance, which in fact is more restrictive for borrowers who could once go into debt up to 33% without counting borrower 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 sales 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.
Note 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 which must imperatively apply these criteria to 80% of their file. 20% of the credit offers issued per quarter may derogate from this rule, but beware, 80% of this allowed flexibility margin must be intended for buyers of main residences and 30% of them must be first-time buyers. Banks’ room for maneuver is therefore very small.
Read also: Becoming the owner of your property: what it really costs you
A contribution to cover at least notary and agency fees
Have these new provisions caused an upheaval in the granting of mortgages? Not really since the banks already often applied these eligibility criteria and these measures were announced and expected.
Remember all the same that the banks are more and more careful about the contribution which must cover both agency fees and notary fees, and even ideally part of the sale price. Indeed, the greater the contribution, the shorter the duration of the loan and the less the amount borrowed will be, which makes it easier to be below the fateful 35% mark.
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