Like many French people, are you thinking of buying a second home? The second home is a place of reunion for holidays or even weekends, but it is also likely to become a good investment if you prepare the purchase well. Apart from the choice of the property and its geographical location, you must above all ask yourself the right questions in terms of its financing.
As with the purchase of a main residence, the mortgage for a second home remains a mortgage, that is to say, significant financing which will only be granted under certain conditions. Thus, even if it is a completely different project, obtaining the mortgage will depend on your financial capacity and your borrowing profile. It is even admitted that banks can be more demanding in the context of this type of project. Therefore, before embarking on the purchase of a second home, it is advisable to know your borrowing capacity. This is the amount you are able to borrow taking into account your income and expenses. It is complex to do this calculation on your own, which is why there are online tools that offer this service for you for free. Once on the simulator, you just have to follow the instructions and get the result in a few minutes.
In principle, when you plan to apply for a mortgage for a second home, it means that you already have a main residence. As most French households use a mortgage for the acquisition of a main residence, it is therefore possible that you already have a mortgage in progress, to which you will add another one. If this is your case, check your debt ratio carefully. If you have outstanding loans, your debt ratio will be higher, which will make it difficult to obtain a new loan. Indeed, banks will not lend you above a certain threshold, whatever your real estate project. In general, the maximum debt ratio accepted by credit institutions is 35%, in order to protect against possible over-indebtedness. On the other hand, it should be noted that if the borrower benefits from a largely high income in relation to his expenses, the lending organizations are likely to make an exception and go beyond 35%.
Borrowing for a second home is more complicated than for a main residence, especially when the first loan is still being repaid. This is why you must build a solid case to show your banker that you are aware of the implications of a new mortgage. Through your file, you must be able to demonstrate that you have taken into account the maintenance costs of the secondary residence which will also generate expenses during the loan repayment period. Banks generally appreciate that their client presents them with a well-thought-out project.
For example, you have the possibility of mentioning your intention to rent the property when you are not there, which would constitute additional income intended for the repayment of the loan. Talking about this leasing possibility will make a huge difference in the eyes of the banker. In addition, the question of the guarantee should not be neglected and from this point of view, you are advantaged, because you already own a property that can be the subject of a mortgage guarantee. However, if you are not sure of being able to repay your loan to the end, this type of guarantee is not recommended. It authorizes the bank to seize your property in the event of non-payment.
