Today, one in two French people accesses the property. If obtaining a mortgage involves many steps, the amount of the personal contribution is one of the decisive conditions when granting it. What is the minimum amount of personal contribution requested by the lending institutions in the context of a mortgage? Why is the contribution necessary? And what are the risks associated with a real estate loan without contribution?
Personal contribution to a mortgage, how does it work?
In the context of a home loan, the personal contribution represents the amount of savings that the person can inject into the purchase of the property. He is an undeniable asset in the negotiation phase with the banks.
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Most financial organizations ask for 10% personal contribution for a mortgage, or the total costs related to the purchase (agency fees, notary fees, warranty fees).
Under certain conditions, and depending on the client’s profile, the bank may grant the loan. It is said that it is a 110% credit.
The personal contribution can be brought in the form of savings, donation, inheritance, sale of real estate, or in the form of constituent loans. As part of a real estate purchase as principal residence, the release of the employee savings is possible by anticipation.
Why do you need to make a personal contribution to a mortgage?
In the current unfavorable economic context, the issue of personal contribution remains a sensitive subject. It’s about finding the right balance between injecting your savings and coping with future surprises.
The more you contribute, the more your trading margin with the bank will increase.
The optimization of these factors remains complex.
The personal contribution in the context of a mortgage will also give value to your file against banks. Significant savings will show that you have anticipated your purchase, and that your approach has been thought through.
The risks of a home loan without personal contribution
Each buyer will not have a personal contribution. Given the low mortgage rates, more and more young people want to start buying a home. Indeed, a mortgage represents a charge identical to that of a rent, hence the interest to buy at the earliest.