Home loan insurance: You can't avoid it, taking out a loan insurance policy is compulsory to obtain a real estate loan. So much the better, because it guarantees the repayment of your monthly payments in the event of a hard blow. It is also an excellent way to protect you and your family.
There are different levels of coverage possible, from the minimum to a more complete coverage. The minimum level of coverage varies depending on the project. Death insurance is mandatory. It guarantees the repayment of the loan in the event of the death of one of the co-borrowers. It is always combined with one or more disability insurance policies. There are different types of contracts covering different degrees of disability (partial or total) and work incapacity (temporary or irreversible). The cost of the insurance varies greatly depending on the contract, First Finance can help you to minimize it.
Guarantee : To further protect themselves against the risk of non-payment, banks require that the loan also be covered by a guarantee. It allows the repayment of the loan in case of non-payment outside the cases covered by the insurance. This guarantee costs about 1% of the loan amount. There are two types of guarantees: sureties and mortgages (or securities). The choice of the guarantee depends partly on the bank: some banks almost always prefer the deposit, others the guarantee. A deposit is generally less expensive than a real guarantee.
Choosing the right loan: There are different types of loans : most of the real estate loans granted in Europe are called "amortizable".
Amortizable loan: The amortizable loan is the most common and is the one we offer in most cases. Its duration varies from 5 to 30 years. The capital is amortized over time (hence the name), meaning that the borrowed capital is gradually repaid. In most cases, the monthly payments are constant throughout the term of the loan. This gives you a clear picture of the burden the loan places on your budget.
Example :
A real estate loan of 200,000 euros repayable over 15 years at an interest rate of 1.80%, the monthly payments will amount to 1,269 euros. The capital repaid in the first month is 969 euros, the interest is 300 euros. The 60th monthly payment of 1,269 euros includes 1,058 euros of principal repaid and 210 euros of interest. As for the 180th monthly payment (the last one), the capital repaid will be 1,267 euros and 2 euros of interest.
Bridging loan : You already own a house but you want to change your home? With a bridging loan, you can buy your next home before you commit to selling your current home and use it as a down payment. This loan helps you for a limited period of time: between the purchase of the new property and the sale of the old one. It usually lasts no more than two years. At the end of the term, you must pay it back. Withdrawal and smoothing loans: to allow you to reduce the total cost of a loan without increasing your monthly payments too much, the two-line loan, also called a withdrawal loan, can be an option.
Good plan :
It's often a good idea to pay off outstanding loans using some of your savings to avoid setting up a smoothing arrangement that would increase the term, rate and total cost of the loan.
