In France, the real estate market has been doing quite well for years, even if it has tendency to brake currently. And who says investment in stone, most often says mortgage. Indeed, the personal contribution is generally not sufficient to carry out such an operation. However, the home loan represents a significant cost, which varies according to the duration of the loan and the interest rates charged. Especially since the rates tend to rise againespecially because of inflation. To obtain a mortgage, it is necessary to compile a loan application file. This is where the first ancillary costs come in. Banks will often charge what they call an application fee. If these generally do not exceed 1% of the amount of the mortgage, the sum can quickly reach several hundred euros, or even exceed 1,000 euros. Be aware, however, that it is possible to negotiate these application fees, or even to obtain their abolition.
Notary fees, an essential element
Contrary to administrative fees, notary fees are absolutely unavoidable in the context of a real estate purchase. Also called acquisition costs, they weigh on the final invoice and must be taken into account by the buyer. They are largely made up of taxes and levies intended for the State and local authorities (municipalities and departments). The rate of these taxes may vary depending on the location of the property concerned and represents the majority of notary fees. The rest is made up of the notary’s emoluments, that is to say the share which is due to him at the end of the transaction. Again, a rate is applied and it is variable depending on the amount of the transaction. Thus, for all transactions over 60,000 euros, this rate is 0.799%, against 3.870% for those below 6,500 euros, for example. Note that if the sum invested is greater than 100,000 euros, the notary has the possibility of applying a discount of up to 20% of his fees.
Borrower insurance and other bank charges
Costs related to borrower insurance are also to be taken into account in the context of a mortgage. Subscribing to such an insurance contract is not, however, legally required. However, in practice, banks will require this guarantee. This borrower insurance allows the bank to be covered in the event of disability, incapacity for work or death. The cost of such a contract is variable, as it depends on many factors. The age of the insured, his state of health, his profession, the duration of the loan and its amount are taken into account in particular. Between the interest rate applied and the monthly payments to be paid, this insurance can represent a quarter of the amount of the mortgage, or even more. This is therefore a point to take into account before buying real estate. Be aware, however, that the additional cost of borrower insurance can be reduced by playing the competition, especially since it is now possible to subscribe to it with an insurer other than the bank that granted you the credit. Speaking of bank, also take into account the bank charges related to the possible opening of an account as part of obtaining your mortgage.
Other possible costs in the context of a mortgage
There are also so-called warranty costs. These protect the bank in the event of non-payment of the monthly installments of the mortgage and generally take the form of a mortgage or a deposit. Generally count 1.5% of the total amount of the loan for the mortgage and 0.8 to 1% for the deposit. If you go through a real estate agency, you will also have to pay agency fees once the deed of sale has been signed. Finally, if you decide to use a real estate broker, he will apply brokerage fees. An approach that can nevertheless be profitable since this professional will do everything possible to find the most interesting mortgage possible.
(By the editorial staff of the hREF agency)
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