When a loan request is constructed “without contribution”, it is a loan at 110% which covers the acquisition of the property and related costs (guarantee costs, notary fees, etc.). If the spectrum of banking establishments likely to accept this condition is lower, it remains possible.
Without contribution, can a bank refuse to make a loan offer?
When considering a loan application, all banks determine the level of non-repayment risk you represent. This is why, the majority prefer that the borrower can bring around 10%, even 20% of the price of the property.
In the current context where housing prices remain low, the notion of risk has (re) become the main concern of banks. The property can thus depreciate and no longer cover the entire amount to be reimbursed, generating, in the event of non-payment, a dead loss for the lending establishment, despite the foreclosure of the accommodation.
Today, many banks prefer to refuse credit rather than take this risk. The lack of personal contribution being the source of 25% of loan refusals. However, other factors can tip the scales on the other side.
What are the rules for obtaining a loan without contribution?
If, to buy a property, it is better to have a personal contribution, it is possible to obtain a loan without contribution, when his file has these advantages:
– A stable professional situation. If you don’t have a permanent contract, the last 3 years of an entrepreneur’s activity must be able to inspire this stability. In 2015, 22% of files were rejected due to this criterion.
– A sufficient level of income. The ideal is to have an individual minimum wage of USD 2,000, without having taken out consumer loans. The debt level must not be reached with the real estate project. Note that in 2015, it was the bank’s first reason for refusal (30%).
– Good account management. The banks are carefully studying the candidate’s ability to save, as are his overdrafts, peeling the account statements for the last 3 or even 10 months. In 2015, 23% of loans were refused due to this mismanagement.
– Age. The absence of a personal contribution is more easily justified when the loan applicant is young. Not to mention that the bank can expect an evolution in its revenues, while benefiting from attractive insurance rates.
Can this criterion affect the rate?
Yes! By borrowing without contribution, it is difficult to benefit from the best rates, for the simple reason that the scale of banks is built on the level of income and on this personal contribution. Therefore, the borrower can only benefit from average rates.
And no! Because by promoting your file properly with your contact, you may be able to negotiate a few points…
Why not let your broker negotiate for you?
You will understand, several parameters are taken into account for:
- on the one hand, manage to borrow without contribution,
- and on the other hand manage to benefit from a “good rate”.
In this situation, calling on a credit broker is the solution to achieve this result!
Depending on your profile, he will be able to mount your financing file, to present it in his best angle, because he knows the establishments most likely to accept a loan at 110%.
He will negotiate for you with his banking partners the conditions of your loan and the rate in order to present you the best offer!
Finally, the credit expert will avoid the wave of discouragement associated with refusals from certain banking establishments that you could wipe alone, because its mission is to allow you to acquire the property for which you fell in love!