Real estate credit: loans difficult to obtain after 45 years, five strategies to circumvent the rate of wear

Real estate credit: loans difficult to obtain after 45 years, five strategies to circumvent the rate of wear

Caught between the wear rate and higher borrower insurance than for the youngest, many over 45s are currently experiencing difficulties in obtaining loans for their real estate projects. But solutions remain possible to achieve its ends.

Has getting a home loan after 45 become mission impossible? Yet in the prime of life and with significant income, many borrowers are currently experiencing the worst difficulties in passing their credit files.

“Due to the current low leeway between credit rates and wear and tear rates, too expensive borrower insurance can quickly block a loan, points out Cécile Roquelaure, director of studies for the broker Empruntis. And we know that his cost varies greatly from one file to another.Age is the main factor: for an equal profile, a person over 45 can have borrower insurance up to 4 times more expensive than someone aged 30.

What is the wear rate?

The usury rate corresponds to the overall effective annual rate beyond which banks are not allowed to lend.

In concrete terms, it therefore includes the interest rate, guarantee costs, borrower insurance and administrative costs.

“And as the cost of money for banks is currently high, they have little room for maneuver and offer high credit rates even to wealthy households,” she continues.

Sometimes unexpected situations

The current situation offers sometimes unexpected situations. “We have occasionally advised clients of‘borrow more to be able to pass a file, illustrates Pierre Chapon, co-founder of the broker Pretto. When a borrower has a large down payment and requests a small sum from the bank, the risk is that the fixed costs weigh more in the calculation of the annual percentage rate and that the loan is blocked.

Anyway, if your loan is impossible to obtain because of a wear rate exceeded by too expensive borrower insurance, several strategies can allow you to achieve your goals despite everything.

What solutions to circumvent the rate of wear?

The first of these is try to find cheaper insurance. “What is currently encouraging is that the banks are more flexible. They can agree not to provide borrower insurance and go through a delegation of insurance so that the overall effective rate remains within the nails of the rate of borrower. “Wear, says Pierre Chapon. Sometimes you have to negotiate a little. The borrower can, for example, offer the bank in exchange to entrust him with his home or car insurance.”

In the event of the banks’ refusal or the impossibility of finding more competitive borrower insurance, Cécile Roquelaure indicates that those who borrow as a couple can request “lower their insurance quota“. Concretely, if this is lowered to 75% and one of the two borrowers dies before the total repayment of the credit, the other will have to continue to pay the remaining 25%.

“There too, it is to be negotiated with the bank, specifies Pierre Chapon. The advantage is that it makes it possible to mechanically lower the weight of the borrower insurance. And nothing prevents the household from resorting to a provident fund. which will allow him to be covered at 100%.

The adjustable rate capped, ally or trap?

Another option, which has disappeared from the radar for the past ten years but which has recently come back, is the use of variable rate loans. “They make it possible to obtain credit rates at the start that are more attractive than with a conventional loan, explains Pierre Chapon, co-founder of the broker Pretto. On the other hand, this rate will be readjusted upwards or downwards each year according to market development.”

Instead of a fixed rate at 1.9%, a borrower can, according to the broker, obtain an adjustable rate capped at 1.65%. But this can be risky, since this rate will follow the market curve.

“You have to be careful with the offers, warns Pierre Chapon. With a rate capped at 1, the risk is limited, since the credit rate may change by 1% upwards or downwards. On the other hand, if a revisable rate capped at 2 can help out an experienced investor, I do not recommend it to unsophisticated borrowers.”

Finally, two last potential solutions are put forward by Cécile Roquelaure. “The multiline loan makes it possible, for example, to borrow part of the sum over 10 years and the other part over 20 years so as to bring the annual effective annual rate below the rate of wear, she explains. Finally, it is also sometimes possible to borrow in the form of a Family SCI. For the latter, the treatment is little different than for conventional borrowers. Some brokers offer this option to pass difficult files.”

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