Do you want to become an owner or embark on a new real estate acquisition? The first step in this project is to know precisely your purchasing budget. For this, no secret, you need to calculate it based on several elements. To your calculators!
[Le marché immobilier est actuellement à l’arrêt pour ceux dont le projet démarre et ce, en raison de l’interdiction des visites immobilières. Mais si vous préparez un projet immobilier, voici quelques conseils pour connaître votre budget d’achat. Notez que vous pouvez, en attendant la fin du confinement, vous renseigner sur les biens dans votre budget via des visites virtuelles et contacter les agences immobilières ou les notaires qui sont en activité.]
Know your real estate purchase budget is the first step in carrying out a project of this magnitude. Knowing it allows you to master it so as not to have unpleasant surprises or disappointments when looking for an apartment or house. Studying your purchasing budget will help you define your purchasing power. To define it, you will have to base yourself on several elements.
Your income and your debt ratio
This is the basis of the study of the banker’s file: the calculation of your debt ratio according to your income and possibly your expenses. You will not be able to take on more than 33% of your income, even if it is very high and you have a lot of money left once the monthly payment is paid.
If you have charges, a car loan, alimony, debts: these will be deducted to define your budget. It is therefore strongly recommended to pay off your debts before applying for real estate financing.
Interest rates and loan term
To know your budget, your income is not the only elements to consider for the calculation. The budget will be higher depending on the rate offered by the bank and the duration of the loan. The more you borrow at a low rate, and over a long period, the greater the financial envelope will be. Clearly, your real estate purchase budget will be higher if you borrow over long periods.
On the other hand, the loan durations are in the sights of the High Council of Financial Stability (HSCF) which recommended to the banks to limit the longest durations, namely not to finance beyond 25 years. The same is true for the debt ratio which cannot exceed 33%.
Your contribution and your help
Your hard-earned savings will be added to the banker’s envelope. If you have money aside, on a booklet A for example or a PEL, it is advisable to use them for your purchase if you want to increase your purchasing power. In addition, the greater the personal contribution, the more attractive the rate offered by the bank. The contribution is an element of negotiation with the banker. You will also be able to get a boost from the state depending on your profile.
If you are buying for the first time, you are what the professionals call a first-time buyer. You are therefore certainly eligible for subsidized loans: the PTZ for a purchase in the new building or with work in the old and the loan from Action Logement.
Notary fees and other costs
Knowing your purchasing budget also means taking costs into account. Notary fees are to be expected for your purchase, more precisely acquisition costs which are made up of numerous taxes and the remuneration of the notarial office. They are calculated on the price of the property: 7 to 8% in the old and 2 to 3% in the new. The purchase costs will be financed with your personal contribution, unless you obtain non-contribution financing from the banker.
Buying with a real estate professional generates costs if they are the responsibility of the purchaser. It is also to prevent them that certain individuals sell among themselves. Agency fees are like notary fees, a percentage of the sale price, generally around 5%. They are therefore to be included in his purchasing budget.
In summary, to know your purchasing budget, you will need to:
- Calculate your debt ratio of 33%
- Calculate your intake
- Find out about financial aid
- Know the banker’s conditions: duration and rate
- Calculate the costs of the purchase (notary fees and agency fees)
How to increase your purchasing budget?
Some tips can help you increase your real estate purchase budget. For example, by increasing your personal contribution (with your company savings plan (PEE) that you can unlock for the purchase of your main residence), by reducing notary fees, by borrowing for longer, by reducing your charges, by comparing banks to obtain the best rate, etc.