The conventional mortgage is a mortgage at a rate capped according to its duration. How to obtain a loan agreement, what are its features and benefits for the borrower?
Principle of the loan agreement
The real estate loan is a mortgage credit rate capped according to the duration of the credit, it is granted without means test. The real estate credit agreement can be granted by all banks or real estate credit institutions that have entered into an agreement with the State.
The main advantage of the real estate loan agreement is to qualify for the Personalized Housing Assistance (APL).
Object of the loan agreement
The real estate credit agreement may be intended to finance:
- the purchase of a new home;
- the construction of a house;
- the purchase of an old dwelling with or without work;
- purchase of land (up to 2,500 m²) and construction
- a house on this land, provided that the construction is completed within 3 years after the purchase of the land;
- improvement works or energy saving works (the amount of which must be at least 4 000 USD);
- a rental investment, provided that the dwelling is the tenant’s principal residence.
Conditions for obtaining a loan agreement
Two conditions must be fulfilled for obtaining a conventional mortgage:
- The housing must be intended for the principal residence of the beneficiary or his family, that is to say occupied at least 8 months per year by his spouse, descendants, ascendants or those of his spouse or that of his tenant. The housing must be occupied within one year after the acquisition or completion of the work (in case of retirement, return from overseas or abroad the period is extended to 6 years).
- The financed housing must have a minimum surface, which depends on the beneficiary’s family situation (9m² for a single person, 16m² for two people and 9m² more per additional person). When the loan is intended to finance expansion works, the living space created must be greater than 14 m².
Characteristics of the Agreed Loans
The real estate loan is repayable and may last from 5 to 30 years. It is possible to reduce the term of the mortgage, with no minimum duration, or to extend the term to 35 years.
This loan agreement can finance your entire operation by including the purchase price, including the surveyor’s fees and negotiation, liability or damage insurance, as well as the various taxes, without any personal contribution.
The rates of conventional mortgage loans, different depending on whether it is a fixed rate or a revisable rate, are set by banks or mortgage institutions within the limit of a ceiling rate. Conventional mortgage rates are above and beyond the standard bank lending rates, which robs them of interest if you are not eligible for LBOs.