Feeling ready to become a homeowner? Buying a property is an important project, perhaps the biggest investment of your life. Discover our guide to becoming a homeowner with complete peace of mind.
Finding the ideal property
Every property project starts with a key step: finding the ideal property. Whether you’re on your own or accompanied by a professional, there are a number of ways to go about your search. But not without having clearly defined your project!
Clearly defining your project
Before you start looking for properties to visit, you must clearly define your project, taking into account your desires, your needs and your financial capacity. If you want to buy a property to live in, you will not necessarily have the same requirements as for a rental investment. Similarly, you will not allocate the same budget to both projects.
Defining your project well is therefore a crucial step in order not to waste time spreading yourself too thin. Once you have defined your project, you will inevitably have a better idea of the city or district in which to target your search. You can then use the market prices and compare them to your budget to see if your project is feasible, if you need to lower your requirements or, on the contrary, if you can think bigger.
Working with a property professional
Once your project is well defined, you can start looking for the ideal property. If you do not necessarily have the time to do the search yourself, the best solution is to turn to a property professional. You can choose between different people, specialised in different fields:
The real estate agent
Their role is to act as an intermediary between the various parties involved in a transaction (purchase, sale, rental). As a real estate professional, he or she is subject to a certain number of obligations, such as an obligation to provide information and a duty to advise. This makes it possible to avoid unpleasant surprises due to a lack of information on the part of the seller. His network of partners and his perfect knowledge of the property market will save you time and energy in your search.
The property hunter
Working solely on behalf of the buyer, the property hunter accompanies his client throughout the buying process. He defines with him his expectations and his budget, then proposes properties to visit. He accompanies and advises him during the visits, negotiates the selling price, and accompanies him in all the administrative steps necessary to conclude the sale. The property hunter’s remuneration is generally 3% of the amount of the transaction. They are paid on the basis of success: you only pay them if the sale goes through!
The property developer
If you are planning to buy a new property or a you will have to work with a property developer. Their role is to manage the entire process of selling new homes, from buying the land to handing over the keys. As most homes are bought before they are built, it is essential to ensure that the developer is reliable, both in terms of skills and financial health.
Buying between individuals
To keep costs to a minimum, many buyers buy their property directly from a private seller. In this case, you have to conduct the search yourself, mainly via property websites. Between the research, the calls, the visits and the various steps, you have to be prepared to devote a lot of time and energy to your purchase project! You also have to be prepared to do without the advice of a professional, which implies a comprehensive knowledge of the property market and of the town where you want to buy your property.
Afterwards, you should be particularly vigilant when visiting the property, so as not to miss out on any major information or defects in the property. Check all the documents attached to the property (diagnostics, minutes of the general meeting, town planning notes, etc.) to make sure you don’t miss anything!
Financing your property
You’ve found the ideal property and made an offer to buy which has been accepted by the seller! Congratulations, you’ve taken your first step towards home ownership! You will now have to sign the compromis, or promise to sell, in front of a notary in order to make a mutual commitment with the seller. Generally speaking, you then have 3 months to finalise the sale.
The vast majority of buyers have to take out a mortgage to finance their purchase. For some, it is the first loan of their life! It is therefore important to understand how a home loan works so that you can make a well-informed decision.
What you need to know about home loans
Most home loans are “amortizable” loans. Their term varies between 5 and 30 years, with an average term of around 20 years. The capital borrowed is amortised over time, i.e. repaid progressively with constant monthly payments. They comprise each time a part of the outstanding capital and the interests.
To obtain a loan, it is strongly recommended to have a contribution of at least 10% of the value of the property, which corresponds to the amount of the notary’s fees and guarantee. This guarantee, required by the banks, protects them from a possible default on your part when it is not covered by insurance. It represents 1% of the amount of the loan.
The insurance guarantees the repayment of the monthly instalments in the event of a setback. Like all insurance, it can offer various levels of cover, from the legal minimum (death and disability insurance) to more comprehensive cover. The cost of the insurance represents a significant part of the mortgage loan and varies enormously from one contract and one bank to another. It should therefore not be chosen at random!
Finally, you should know that, although the amortising loan is the most common way of buying a property, other types of loan exist. The crossover loan, for example, allows you to split the financing of your property into two loans of different durations in order to reduce the total cost. However, it is not widely used because it is more complicated for the banks to arrange. The bullet loan allows you to pay only the interest during the entire duration of the loan and to repay the capital borrowed only at the end. But the interest rates for this type of loan are generally very high.
The main steps in applying for a loan
To obtain a home loan, you have the choice of applying to different people. You can approach the banks directly and present your application. You will then have to compare the various offers and negotiate your loan at the best rate with different banks to obtain the best loan offer. To save time and energy, you can go directly to a real estate broker to help you put together your file, approach the banks and negotiate the best loan, both in terms of rate and conditions.
After comparing offers, you apply for a loan from the banks you have selected. The bank then studies your application and, if it accepts it, sends you an agreement in principle. This is not yet an official loan offer: you also need to get the insurance and guarantee approved! If all goes well, you will get them about 3 weeks after the agreement in principle. Only after this validation does the bank send you its loan offers by registered mail. Before accepting them, you have a mandatory 10-day cooling-off period during which you check that all the conditions of the loan are met.
On the 11th day, you can finally accept the offer by returning it signed to your bank. You can then contact your notary to sign the deed of sale. Tell your bank the date: it will transfer the funds directly to the notary’s escrow account, which will pass them on to the seller on the day of signing.