The personal contribution is an important element in a loan application because it allows to obtain advantageous conditions for its financing. The rate is part of these arguments put forward by banks but how much personal contribution is needed to obtain a mortgage, is it mandatory? Response elements.
Real estate loan, the steps of obtaining
Subscribing for a mortgage involves applying to a bank. This request will make it possible to evaluate the borrower’s situation and in particular his financial situation, this will make it possible to determine the feasibility of the project and thus several elements will be asked to the borrower. One of the fundamental elements is the personal contribution, it is a sum resulting from a savings or the resale of a good (car, equipment) to allow to inflate the borrowed amount.
The contribution can therefore serve several purposes, either to increase the amount of real estate by adding it to the capital borrowed, or to reduce the cost of housing credit by deducting this amount from the loan. In both cases, having a personal contribution can reassure the bank on the repayment of debts and especially to benefit from attractive conditions, because the borrower shows that he is a good manager of his finances.
How much do you need to have personal input?
The personal contribution is not an obligation, some borrowers with good borrowing ability manage to obtain their funding without having a personal contribution. That said, the banks favor the files with a personal contribution, most of the borrowers bring at most 30% contribution to the amount to borrow. Having a contribution of 10% of the credit amount also seems a good first basis for negotiating good loan terms.
The rate is often the first argument banks for borrowers with a personal contribution, so it is possible with a contribution even small to negotiate more advantageous conditions, this additional amount will mainly allow to pay the costs of implementation of the case financing, namely the fees but also the costs of guarantee and passage to the notary (deed of ownership). In the context of a lack of contribution, it is necessary to resort to an overvalued loan, one speaks very often of mortgage to the 110%.
Get a loan estimate with input
It is possible to survey the market of credit institutions and banks that offer mortgage loans, this allows to direct his file to the right organizations and especially those that offer the best conditions. The simulator is designed to guide the demand to the banks that can provide the best response in terms of funding, whether on the amount, duration, rate but also on the contribution. This is completely free and requires no commitment on the part of the applicant.
When applying online, the form will systematically request the contribution made available to the borrower, it may be a real contribution to the account of the applicant or a fictitious contribution, which will result from a resale or future savings.