Real estate loan agreement: information to know
July 1, 2019
What is a mortgage agreement?
The mortgage credit agreement is the reference document that materializes the commitment made between the lending institution (bank, credit institution, etc.) and the borrower. In this document, all the terms of the credit are entered: sum lent, obligations of both parties, conditions and guarantees.
The mortgage loan agreement is an essential document: it is the one that is authentic and serves as a reference throughout the life of the loan. It is therefore very important to read it in its entirety and to be aware of all its clauses before signing it.
How to get a mortgage loan?
Obtaining a mortgage is not automatic. Before offering you a contract, the financial institutions to which you have applied for Claudinement will study your file, ie your profile, your professional and banking situation, your project and your borrowing capacity.
If your file is accepted, you will need to send your vouchers to the institution. You will then receive a loan offer , accompanied by a standardized information sheet (FISE). It is this document that serves as the basis for the establishment of your future mortgage credit agreement.
The Scrivener law requires all lending institutions to provide borrowers with a set of information necessary to know all the terms and conditions of the mortgage agreement. The goal: to allow consumers to have all the elements to make their decision before committing and signing the contract.
All this information must be sent to the borrower in two documents: the loan offer and the standardized information sheet (FISE).
Details of the terms and conditions of the contract
The standardized information sheet summarizes all the information you need to know about the mortgage agreement. It specifies in particular:
- The identity of the lender, the nature and purpose of the loan;
- The main characteristics of the loan: amount, duration, type of rate, total amount to be repaid;
- For fixed rates, the schedule of depreciation, which must detail the distribution between capital and interest;
- For variable rate loans, note presenting the terms and conditions of variation of the interest rate;
- The annual percentage rate of charge, or APR
- The number, periodicity and amount of payments;
- Additional obligations, the required guarantees (mortgage, lien of lender of money, surety organization …);
- The possibility or not of partial or total prepayment;
- The consequences for the borrower of non-compliance with loan commitments;
- Any other additional information.
The law also requires lending institutions to inform you of the consequences of taking a loan, particularly on the risk of over-indebtedness and to assess your solvency.
Real estate credit agreement: points of vigilance
Reading and understanding your mortgage agreement is essential. If each line of the contract is important, do not forget to be vigilant on the following points:
- Variable rates: the rate of the first period is often a call rate, be careful not to focus only on it;
- Anticipated prepayment penalties;
- The presence of a loan transfer clause;
- The presence of a deferred repayment clause;
- The presence of a maturity modulation clause;
- The presence of a loan insurance clause.
Subscription to the mortgage agreement
Once your loan offer is accepted, signed and returned to your bank or credit institution, it becomes a real estate credit agreement and the subscription can take place. To note :
- The loan offer is valid for a minimum period of 30 calendar days from the moment you receive it;
- You can only accept the offer after a legal cooling-off period of 10 days from the date of receipt of the offer.
The release of funds can take place once the reflection period is over.
How to find the best mortgage agreement?
The best mortgage agreement is the one that offers you the best terms and guarantees. To find the most competitive offer before applying, the ideal is to use a comparator of real estate credit! Free, fast and no obligation, the mortgage simulation allows you to access in just a few minutes cheap credits offers available according to your profile.