Home loan and works: only one financing

When taking out a real estate loan, the goal is to look for a loan that supports almost the entire real estate project. Besides, it is possible to include the possible costs of the works in the loan. Depending on the credit selected, there are various possibilities to finance the work to be done to make the accommodation habitable.


The 3 possibilities of mortgage with work

home loan

To bring together the mortgage and the works, the bank offers various possibilities which require separate repayments:

Loan with two lines of credit: this is a loan split in two. The first corresponds to the purchase value of the accommodation, while the second is capital devoted to works. In this case, the amount dedicated to the work is released as and when it is carried out. For this type of loan, the cost of credit is close to that of a conventional home loan without work. On the other hand, it involves interim interest, that is to say a release fee each time capital is released.

Loan with a single line of credit: this type of loan makes it possible to free up capital at one time for the purchase of real estate and for supposed work. To grant it, we take into account the debt ratio which is the share of monthly payments payable on the borrower’s income. This cannot exceed 33% without possible compensation for any rental income.

Loan with total deferral of repayments: this is like the previous case. In fact, only one line of credit is taken into account. On the other hand, reimbursement to the bank is made only when the accommodation is restored to its working condition, that is to say when the work is finished. This allows savings to be made for future monthly payments.


The advantages of contracting a single financing

home financing

Including the cost of the work in the home loan avoids taking out an additional loan. Being in a situation of increased debt is not easy. Thus, there is no need to reimburse other monthly payments.

One funding will also save money. Indeed, in certain situations, it is possible to carry out the work yourself, although most of the time, when applying for a mortgage, the bank requires that these must be done by a professional. The bank can thus free up a specific sum for the renovations to be carried out. This allows the work to be financed directly, without having to advance the supposed costs.

Note that a solution is not regularly proposed but it allows both to finance the acquisition and the work, only if the mortgage has already been put in place, it is the credit consolidation. This operation actually offers to buy the mortgage and add to the contract the amount of work to finance, all allow you to take advantage of a single monthly payment.

Real estate loan application: why you have to be patient

Summer period and conjuncture of (extremely) low rates oblige, the delays of treatment of the files of request for mortgage loan become longer. Do not hesitate to include this additional time if you sign a sales agreement.


Borrowing rates

This is no longer a scoop: the borrowing rates for a property purchase are at their lowest! According to the Cream Credit observatory, in July, the average rate fell below the symbolic bar of 1% for loans over 15 years, at 0.96%. Over 20 years, borrowers get an average fixed rate of 1.14%, and 1.37% over 25 years. Conditions that have never been so favorable to borrow!

Who says low rate, says borrowers in number in banks. Certainly, they do not see an influx of renegotiation files, as was the case in 2015 and in 2016-2017. The bottleneck is not comparable to that of the end of 2016, when economists announced a possible rate rebound. However, the production of new real estate loans remains very high, and this can be seen in the processing times, in this summer period, synonymous with annual leave. in credit institutions: Some have indicated that they will not rule on new cases until the start of the year, says Arwind Landcode, founding president of Cream Credit.


Up to a month for a response

The broker Cream Credit confirms, in his letter of the month of August: Attention to the processing times, count up to a month for a response! The online broker Good Lenders is a little less alarmist, evoking an additional delay of 12 days during the summer.

Esmael Bernier, communications director of Good Lenders, sees this as the only downside of the current period, which is also extremely favorable to borrowers: The banks are completely saturated, What is more, with the period of leave synonymous with limited teams, the processing of files, therefore, takes a long time and the processing times are lengthening enormously. We can only advise you too much to consider a date of signature of the authentic deed at 3 and a half months or even 4 instead of the classic 3 months, because this will allow you to build your loan file without stress by staying Zen.