Calculate your monthly mortgage payments ! The steps of a loan financing :
1. What is a monthly mortgage payment and what does it include?
When people need financing to buy an apartment, they often rely on banks. When taking out a loan from the banks to finance the purchase of a home or a real estate investment, the first step is to understand the elements! One of the crucial elements to take into account when taking out a real estate loan is the monthly loan payment. This is the amount owed to the bank by the borrower for the repayment of a real estate loan. Each monthly payment includes a part of the capital to be repaid as well as the interests and the additional expenses like insurances.
2. Calculating your monthly mortgage payments
Once you have a range of the cost of your real estate project in mind and thus the budget necessary for your purchase, you can simulate the monthly payments of your loan in order to be able to anticipate your monthly expenses as well as possible and thus prepare a pitch for your banker. It is important to know that the acceptance of your project by the banks depends on the calculation of your debt ratio, the higher your income, the lower your debt ratio. According to the law, it must not exceed 35%. Indeed, if you have zero euros left at the end of the month, your banker will not grant you your loan, because your level of indebtedness due to the monthly payments will be too high! More information on the debt ratio here. Thanks to our monthly payment simulator, you can obtain in a few clicks the monthly cost of your loan and its duration to be able to advance on your rental investment project and to realize a loan in line with your income and your financial capacities!
3. What information do I need to fill in to do my mortgage payment simulation?
It is necessary to estimate the total cost of the rental investment project including the price of the property, the agency fees, the notary fees as well as the envelope dedicated to the furniture and the works. The amount of your personal contribution must be deducted from this envelope. This will give you an estimate of the monthly payments you will have to make if you choose to invest in this project. The longer you borrow, the lower your monthly payments will be! The advantage is that in the case of a rental investment, your income increases with the amount of rent you receive and can offset your monthly payments!
4. What are the limitations of this loan simulator?
This simulator gives you an initial indication of the monthly payments you will have to make for a particular project if you will be borrowing. It only gives an indication of the loan and insurance rates applied. It is important to know that depending on the bank and your relationship with your banker, the rate will not be the same and you will have to pay a different number of euros each month. Do not hesitate to ask us for additional advice when you have chosen a real estate project on which you want to position yourself! Because the criteria for obtaining a rate are not the same from one bank to another. Moreover, this simulator is not based on your financial situation, including your fixed charges, your current loans and whether you borrow alone or with others. We advise you to use our other simulators too! The one of your borrowing capacity and the one of calculation of the notary fees related to a real estate project! The results of the calculation of the amount of the notary fees and your borrowing capacity (which takes into account your fixed costs and your income) are the key to the most relevant simulation possible.
5. How is my rate determined?
The borrowing rate, also called the bank interest rate, is determined by the trend in the market as a whole. More precisely, they depend mostly on the key rates. But when you want to borrow there is no equality, in fact, the situation of each borrower (age, risk profile) affects the interest rate of the real estate loan. Currently, the rates are rather low, so there is an opportunity to invest quickly. For a 20 year loan, the rates are between 3.2% and 3.6% for a real estate purchase.
6. How is my mortgage insurance rate determined?
The insurance rate of a real estate loan is linked to :
The type of contract - a bank will apply the rate of its insurance on the capital borrowed, while an external insurance will be based on the outstanding capital.
The risks of the insured person, which may arise from his or her occupation, sports activities and health, but also from his or her age and smoking habits, which could jeopardize the repayment of the total amount of the loan.
The guarantees required, the more important they are, the more the cost of the insurance increases the amount of the loan, especially if there are co-borrowers
7. What is the APR?
The APR or Annual Percentage Rate includes for a real estate loan several elements :
the bank interests
the file fees paid to the bank
the fees paid to the intermediaries involved in the setting up of the loan (broker)
the cost of the borrowers' insurance
the expenses related to the guarantees
real estate fees (in particular those paid to the real estate agent)
all the expenses related to this loan as for example the expenses of maintenance of account
8. I have used the monthly payments stimulator. What are the next steps?
Get your calculator! Now that you have a clearer picture of your loan and the monthly payments you will have to make, you now know how much you can spend on your future rental property investment! Don't hesitate to refine your budget by carrying out a financing capacity simulation and then position yourself on one (or several!) of our investment project offers carefully analyzed and selected by our teams! Also, if you need further advice, don't hesitate to make an appointment with one of our real estate rental investment experts who will be able to answer all your questions and help you negotiate with banks in order to get the best financing!