what changes to borrow from January 1, 2022

Not necessarily a revolution, but good practices now set in stone: this is what will change for mortgages in 2022. The new mortgage credit rules were published in the Official Gazette on 10 October, thus confirming their transition to a legally binding standard. Banks that do not respect them now risk being sanctioned. The detail.

In mid-September 2021, the Higher Council for Financial Stability (HCSF) chaired by Bruno Le Maire announced that its mortgage recommendations will be set in stone. That is, moving from the status of a simple recommendation to the status of a standard, legally binding for banks, with sanctions at the end of 2022.

In short, to be in the nails, the files of the borrowers must comply two main rules: do not commit to excess monthly credit payments 35% of your monthly incomeand get into debt up to 25 years. Few exceptions, these two fundamental principles remain, and banks will always be able to accept 20% of nail filestrying to encourage household purchases for the first time.

Real estate credit – everything that will change for you

On 10 October it was published in the Official newspaper, definitively setting these rules in stone. The HCSF therefore drafted a positive assessment of the current recommendation in mid-December, thus confirming that it intends to make these new rules permanent. The fundamental principles referred to above are confirmed and the final text of the decision also made it possible to remove some ambiguities on the financing conditions starting from 1 January 2022.

27 years for new or in case of work

The maximum duration of the loan – 25 years – is subject to an exception: a 2-year diffr is possible for any project in the new or in the old with massive work. In short: it is not possible to take out a classic loan over 27 years but it is possible to commit to a mortgage loan of 2 years + 25 years, or 2 years during which you pay back only a part of your monthly possibilities, during work, before moving on to the most classic 25-year credit.

HCSF’s decision publishes in October at Official newspaper details precisely the practices for which banks can grant this loan in 2 + 25 years. First, the credits linked to a sale in the state of future completion (VEFA), in the context of a construction of one individual house or as part of a real estate development contract. In short: a new real estate project. Second, a purchase in the old with a work schedule the amount of which represents at least 25% of the total cost of the operation.

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Net result before taxes

In light of the numerous testimonies collected by MoneyVox, some banks are zealous and claim a maximum debt ratio of 35% after taxes, or the net pay in euros at the bottom of the paycheck. Nothing prevents them from being demanding of their loan applicants … but the argument based on 35% after-tax income at source doesn’t hold up!

The HCSF decision publishes in Official newspaper leaves no room for ambiguity on this point: from 1 January 2022 on annual income taken into account to calculate the debt ratio of 35% corresponds to net pre-tax income of the borrower (or the sum of the pre-tax net profit of the co-borrowers, if applicable).

Real estate credit: do we need to calculate the debt ratio of 35% before or after taxes?

The special case of property income

The HCSF decision specifies, for real estate income, such as from renting an apartment, that the income to be considered is the gross income before the deduction of any tax relief and charges, including interest on loans and insurance borrower. The High Council adds that banks must apply discounts to reflect rental risk and that annual income can be increased with tax cuts for rental investments (Pinel, etc.).

The HCSF decision officially enters into force January 1, 2022. Banks are only punishable from this date but, in fact, the rules listed above apply from now on. What really changes in January 2022 is that banks will need to be even more vigilant than before about meeting these conditions in order to avoid fines or penalties.

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