The different cases of refusal
If you find yourself in such a situation, take a step back to objectively analyze what motivated the bank’s decision . The reason mentioned by the customer advisers is not always that which has been taken by the risk analyst.
On the other hand, we advise you not to try to compare your personal situation with others that might seem similar to you. It is impossible to reconcile two decisions often given by two different banking organizations on two separate files.
Finally, browsing the forums is a useful step, but do not take comments for cash. Opinions are not always objective and do not necessarily reflect the actual situation.
The lack of input
A few years ago, the banks agreed to fully finance a real estate investment, ie purchase price and ancillary costs.
Today, most lenders, including traditional banks, require the borrower to have a capital that allows them to pay at least notary and guarantee fees.
To meet this requirement, two possibilities:
- To have available capital or to benefit from a family help, which will be directly injected into the project.
- Benefit from a subsidy in the form of a subsidized loan granted by a 1% housing agency, from a housing savings transaction or a PTZ Plus. The absence of personal contribution is today a first reasons for refusal of mortgage loan.
Inadequate repayment capacity
The repayment capacity of the borrower is undoubtedly the most important criterion of banking analysis. Be aware that respecting the debt ratio does not guarantee that the file will be accepted. It is quite possible to be served a refusal of mortgage loan if the “remainder to live” is considered insufficient by the bank.
This last criterion measures the borrower’s ability to pay all household expenses once all loan installments have been paid.
Problem of holding bank accounts
The bank statements of the last three months are documents constituting the loan file. They allow the bank to check whether the monthly payments of credits taken correspond to the loans declared. But they also show how you manage your accounts.
In other words, the slightest rejection of a levy or unpaid check risks being unacceptable . Payment incidents are not the only elements that can lead to a mortgage refusal.
The banker might interpret debit balances as belonging to a household i nOutstanding Capacity to keep a budget.
Propensity to subscribe to consumer loans
The banker is a trader and his goal is to equip his customers. If consumer credit holds a prominent place among the offers that the latter is regularly proposed, the fact of presenting a file or you have cumulated many consumer loans may pose a problem and in addition to the impact on the market. debt , this situation may demonstrate a certain propensity to consume and a great fragility in the financial balance of the household.
In addition, if you have been forced to consolidate various short-term credits into one medium-term debt deleveraging, commonly referred to as a restructuring operation, you may not have a financing solution until a few months later. time.
Refusal of the surety company
When the choice of the bank guarantee is made on the mutual guarantee, the service of the engagements transmits the file to the company of guarantee which will in turn study the request. The evidence is essentially the same as that which motivates the decision of the lending agency, which does not necessarily mean that the answer will be the same. Thus, it is quite possible that the guarantor refuses to guarantee you while the bank has agreed.
Banks systematically question the FICP (national file of incidents of repayments of loans to individuals) held by the Bank of France since the Lagarde reform of July 1, 2010 for all types of consumer loans.
In the context of real estate financing, the demand, although optional, is now a systematic approach on the part of the bank.
It should be noted that, unlike cases of bank prohibition, nothing prevents the lender to accept your request. However, a registration in the FICP returns in most cases to see his loan application refused.
Unstable job situation
This is one of the aspects on which banks have hardened their position. The economic situation has deteriorated so much that the risk linked to job insecurity has exploded. Thus, it is unlikely that your application will find a favorable response if you are on a fixed term contract or if you are acting, unless you have been acting for many years and you are able to prove that you have always worked.
Rental investment case
Investing in a rental property is a different approach to the one that leads to the acquisition of a principal residence. From a tax point of view, the investor has no interest in making a contribution but on the contrary in deducing as much as possible the interest on the loan. However, many network banks require the borrower to finance notary and guarantee fees.
Another change in “banking behavior” has led these same banks to refuse any mortgage loans to borrowers who do not own their principal residence.
Network bank or specialized institution?
The question of choosing the lender is a strategy that must be taken upstream, at the time you create your file. Be aware that specialized institutions are generally a little more flexible than traditional banks but may be more expensive in the end.
The other advantage of going through a credit institution is being able to borrow for a long time, this no longer allow network banks.
What to do in case of refusal of mortgage?
As we told you at the beginning of our file, make an objective analysis and above all, look for the real reason that motivated the bank to refuse your request.
We must not be satisfied with an evasive answer. Demand clear, precise and above all, well-argued elements.
Depending on the reason (s), try to represent the file by making the necessary corrections.
Contrary to popular belief, know that it is quite possible that the bank accepts a request that it refused a few weeks ago.
Our advice to represent your file
There are many cases where you can improve your record, as long as you take advantage of the first refusal, as this experience should be used to pass your second exam.
Stop spending for three months
If the bank has refused your mortgage application on the grounds that your accounts were not well kept or worse because you had a withdrawal, the solution is to control your expenses while “cleaning up” your bank statements and present new accounts with credit balances.
It is also better to use it to make good habits because such a project will have important consequences on your lifestyle and it is necessary to know how to “hold” a budget.
Lower the debt
When the banking decision is motivated by too much debt, it is possible to play on certain levers to represent a file with a correct ratio.
Sold out a consumer loan
If the problem lies in the presence of a consumer credit and if the capital to repay is low, try to find a solution with those around you. For example, you can ask a member of your family to lend you the money to pay the outstanding amount.
Present the folder again with the new elements. Your accounting situation will be the same if you offer to pay the person in your family a deadline identical to what you repay each month with the bank.
Apply for family assistance to make a minimum contribution
If the ancillary costs are not too high (reduced notary fees for example), it may be possible to obtain the amount necessary to pay the ancillary costs by a family loan. Nothing prevents you from proposing to your “creditor” to remunerate him by offering him an interest rate equivalent to that of a livret A. You enter a legal framework of loans between individuals which can make it possible to unblock the situation.
Opt for a long duration
If the refusal of mortgage loan occurs on the basis of a financing plan providing a loan over a period of 20 years, for example, nothing prevents you to represent the file for a longer period. Be aware in this case that traditional banks may not follow you. Long periods remain the exclusive preserve of specialized institutions .
In this respect, the planned end of the ” Crédit Immobilier de France “, a specialist in very long-term loans, is bad news for all first-time borrowers.
Choose a revisable rate
This is not the best solution, but it has the merit of existing. In the case of too much debt, choosing a variable rate – lower initially – can be financeable. If you have to choose this solution, opt for adjustable rate formulas that provide a ceiling rate in case of rise in the financial indices on which the loan is indexed.
Lift the FICP file
If the file is due to a late payment of one or more credit dates, you will first have to regularize your situation. The banking organization will then ask the Banque de France to cancel your registration. Warning: this may take several months before the de-billing is effective.
Obtain a certificate to terminate the compromise
If the request comes after the signing of a preliminary contract, you must obtain a written certificate of refusal. Know that this document is essential to play the suspensive clause of obtaining loan. Send the document to the notary and your salesman immediately with acknowledgment of receipt.
Consult a broker
The refusal of a home equity loan when you have done all your own work demonstrates the role that brokers play. As a professional, they will advise you. They will then present your file again to other organizations that may this time accept your application.
Be careful when signing and to compete. You can choose between local brokers, often more available, who often have excellent relations with local banks and national brokers, often free (via the internet) that are likely to make you benefit from their large volume of files.
Temporarily give up the project
This is the most unfavorable outcome, but sometimes you have to give up, at least temporarily. It may be just the time needed to restore your financial health, heal your cash flow and pay off some loans.
If this is your first purchase, consider reviewing your real estate project down. It may be better to buy a home smaller or farther away from big cities than to stay as a renter.