Pledge, a guarantee of security for your mortgage loan.

The term “pledge” is defined in the Civil Code by the ordinance of March 23, 2006 as being “a contract by which a debtor hands over intangible personal property to his creditor to guarantee his debt”.

Guarantee a crucial element of your mortgage

An advantageous guarantee for the borrower

An advantageous guarantee for the borrower

In the event of future non-repayment, the borrower can have recourse to an alternative by giving to his bank, as a guarantee , a life insurance contract , a secure investment or anything else of value allowing the bank to finance itself.

It is a guarantee that requires very little cost. However, this is mainly reserved for bank customers, who already have a portfolio of securities sufficient to guarantee all of this credit.

After becoming aware of these various guarantees existing on the market , you will have to make your choice and choose the guarantee which seems the most advantageous in your case. If your situation allows you to benefit from a mutual health insurance fund, do not hesitate to take it. It is the most advantageous guarantee.

For other cases, it is still recommended to take a deposit as a guarantee . This guarantee is more flexible and at lower costs.

How to choose a broker?

How to choose a broker?

Choosing a good real estate broker in Paris is not an easy task. You want to meet the right person, have confidence, feel safe and above all make sure you get the best financing offer on the market . And like all types of trades, there are many real estate brokers in Paris today, so it is not easy to make your choice!

You will therefore try word-of-mouth to find out if by chance, in your entourage, someone would know a good real estate broker. Then you will search the internet and find yourself faced with a multitude of choices. Or for simplicity, you will go to an agency near your home or your workplace.

TO REMEMBER !

  1. The bank will always seek to protect itself in the case of a mortgage with a guarantee
  2. There are different types of guarantees that you will have to choose according to your borrower profile
  3. Surety is certainly the most advantageous guarantee

Borrowing money without contribution is possible and easy!

Do you have little or very little savings but still want to buy a property? Have you surveyed your bank, which tells you that your project is not feasible because you cannot provide all of the notary and warranty costs?

No worries, it is now possible to acquire a property without contribution or with a contribution that does not fully cover the costs associated with the purchase price of your property! It’s possible yes but under certain conditions, obviously ?

Borrowing without contribution is easy under certain condition.

The rule: The contribution must finance the additional costs

The rule: The contribution must finance the additional costs

As a general rule (there are exceptions!), Banks ask to finance agency fees, notary and guarantee fees as well as administrative fees from their own funds. Or about 10% of the purchase price in addition to the agency fees.

In short, most banks will agree to finance only the price of your property net of any costs, or 100% of the purchase price at most.

The reason is extremely simple: if the borrower does not repay the loan, he will seize the property to resell it, without losing the incidental costs.

Borrow without contribution: Yes, but…

Borrow without contribution: Yes, but ...

In this case, there must be good reasons for not having a contribution so that a bank can accept to lend you. This is called 110% financing, that is to say that the notary, guarantee and administrative fees are financed by the mortgage.

These cases remain rare but exist. Some banks specialize in this type of financing and others practice it from time to time but they will be extremely vigilant about your financial situation.

Several borrower profiles can obtain 110% financing, but in any event it will be strictly necessary to respect a maximum debt ratio of 33% (even for the best profiles). That is to say that all of your expenses should not exceed 33% of all of your income, quite simply.

The profiles that have a good chance of borrowing without contribution are the following:

  • Young borrowers, on the condition that they are first-time buyers and that they are considered as “potential profiles”, that is to say that their income is bound to increase rapidly. They recently entered working life and did not necessarily have time to save before buying a property, the banks understand it very well!
  • Individuals with high incomes who already have a significant property and / or financial heritage, and who can afford to invest without risk of no longer being able to pay the monthly payments on their new credit. This type of borrower will have to benefit from a significant living balance (remaining cash after payment of all their credits).
  • Investors who buy rental property and want to reduce their taxes by deducting interest from their loan. They therefore have an interest in borrowing all additional costs and benefiting from the largest loan amount.

It will be complicated, but not impracticable, to borrow without contribution if you are not in one of these three cases. Borrowing without contribution remains a rather infrequent but possible case.

It is however preferable to present a loan dossier with a contribution covering the ancillary costs at a minimum, even if it means asking your family for help. The reason is extremely simple: Few banks position themselves on 110% financing so those who do will not offer you the best market conditions but slightly better conditions, and much lower negotiating margins (especially at the level of exemption from prepayment penalties, loan modularity, interest rate and borrower insurance).

It is simply the game of supply and demand! There are many requests for financing at 110%, and very few banking offers in this area.

TO REMEMBER

  1. Borrowing without contribution is possible for certain specific profiles
  2. Only certain banks will accept to finance the purchase price and the additional costs (notary, guarantee, administrative fees, etc.)
  3. The bank offer being reduced, the conditions you will get will not be optimized at best

 

Loan out of the debt traps

One of the most common debt traps is spending money that isn’t there yet. Although you can theoretically not spend anything that is not also credited to the account, debtors in this category always find a creative way to bridge the time until the planned money arrives. Loans from friends, sometimes even bank loans, credit cards, purchase on account and non-payment of the invoice – such methods can actually work well if you keep a careful eye on the money spent and pay it back conscientiously. At this point, however, the problem comes into play. The incoming money, be it through salary, other loans or similar sources of income, is not available for the expenditure already made. Because it is important to pay additional costs such as rent payments, electricity and food costs – and of course the ever increasing debts. So instead of using the income to pay off the debt, it will be used for other things and the debt will remain

How do debts arise?

How do debts arise?

Debt from money spent that is not there yet is not necessarily the result of poor financial planning. It is much more common that the debtor does not have his needs well under control and always wants or has to buy something new. The money is not considered. In some cases, financial hardship requires such behavior. The basic income for essentials is no longer sufficient for the debtor, so he considers how he can delay the payment of important costs and less important purchases. As a result, open bills add up and new debts arise to pay them. In these cases it can often no longer be said that only the money to pay the debts is not yet there. Rather, this approach has created a real debt problem: The debts to be paid can no longer be borne by the incoming payments. It is a difficult step for many affected debtors to become aware of this unpleasant truth.

Types of debt traps:

  • Debt trap credit card
  • Debt trap smartphone
  • Debt trap cell phone
  • Debt trap home
  • Debt trap car
  • Debt trap teleshopping
  • Debt trap installment purchase
  • Divorce Debt Trap
  • Debt trap condominium
  • Debt trap overdraft facility
  • Debt trap home finance
  • Debt trap subscriptions

Now with a loan out of the debt trap!

Important: problem detection of the debt trap

Important: problem detection of the debt trap

Even before a payment plan is developed, the debtor should think about how he got into the debt trap. Is it due to consumer behavior? Is there really too little income for basic living expenses? Is there a fundamental problem with paying bills on time, even though the money might even be there? If the problem is not identified, even with a well-thought-out repayment plan, debts may arise again. Experienced and sensitive debt counseling can help to identify such developments together with the debtor and provide tips on how to solve them, even while the repayment plan is being drawn up.

How to deal with debt?

How to deal with debt?

The most pressing question about debt out of money that has not yet been there is how to deal with the debt that has now arisen. It is clear that they have to be repaid. How this can happen depends on income, cost of living and urgency of the debt at the time of trading.

Sufficient income, negotiating creditors

In the best case, the creditors are approachable and ready to negotiate, the incidents are neither with the debt collection agency nor the bailiffs and the debtor’s income is sufficient to invest something in the debt reduction every month. In the case of long-standing debts, the debt collection agency is still the better contact than a bailiff who is supposed to collect the money, as debt collection agencies are more flexible in negotiating options and less rabid. In fact, they talk about almost any payment method, as their economic success depends on not handing over the debt to a bailiff.

Low income, creditors willing to negotiate

The creditor will not be happy about a low income for the repayment. However, if the debtor shows a willingness to pay the money, no matter how low the rates, creditors and debt collection agencies often have to agree to it. It is all the more important in these cases to pay absolutely on time and never to incur further debts. It should also clarify why income is so low and whether there are ways to work on this problem.

Sufficient income, urgent debt

Debt becomes problematic when bailiffs come into play. They have very different means of collecting money than friendly letters. In any case, contact with them must be sought early, before enforcement takes place. With sufficient income, repayment agreements can be concluded for a maximum of six months. Punctual payment is mandatory, otherwise the installment agreement may become invalid.

Low income, urgent debt

In such serious cases, debt counseling should be urgently sought. If this has not yet happened, they will work out a debt and repayment plan together with the debtor. This can be presented directly to bailiffs, collection agencies and creditors. However, it can also make sense to think about measures such as an affidavit to defer the debt or a personal bankruptcy to reduce the debt over six years with subsequent freedom from debt. Decisions like this should not be taken lightly, debt counseling also helps in these cases.