{"id":1816678,"date":"2019-03-11T10:04:51","date_gmt":"2019-03-11T09:04:51","guid":{"rendered":"https:\/\/www.newzyexecutive.fr\/mortgages-what-are-the-key-takeaways\/"},"modified":"2026-05-05T08:43:44","modified_gmt":"2026-05-05T07:43:44","slug":"mortgages-what-are-the-key-takeaways","status":"publish","type":"post","link":"https:\/\/www.newzyexecutive.fr\/en\/mortgages-what-are-the-key-takeaways\/","title":{"rendered":"Mortgages: What are the key takeaways?"},"content":{"rendered":"

Are you considering purchasing real estate or shares in an SCPI? Whether your property acquisition is intended as a primary residence or a rental investment, your project will invariably involve a mortgage. But do you truly know which key factors to verify to understand how mortgage lending works?<\/strong><\/p>\n

You have finally found the property you want to purchase, and now you are looking for financing. Whether you choose to work with a mortgage broker or go directly through your bank for your mortgage, the steps involved will be much the same:<\/p>\n

    \n
  1. Provide all the necessary documents required to complete your mortgage application (tax notices, payslips, savings account statements, etc.).<\/li>\n
  2. Provide all documents related to your property (price, agency fees, square footage, etc.)<\/li>\n
  3. Choosing a structure for your loan. And if you are not working with a broker, I highly recommend reading this article.<\/li>\n<\/ol>\n

    Loan Interest Rates<\/h2>\n

    Loan interest is calculated monthly based on the remaining principal balance. Understanding the concept of the remaining principal is essential, as the faster you repay the principal, the less interest you will pay. It is simple mathematics!<\/p>\n

    Fixed-rate or variable-rate? A deeper look into how mortgage loans work.<\/h2>\n

    There are several types of mortgages available. These include fixed-rate loans, adjustable-rate mortgages, and even interest-only loans (as this latter option is very rare, we will set it aside for this article).<\/p>\n

    What is a fixed rate in a mortgage?<\/h3>\n

    A fixed rate is the tool you will typically use. The rate remains constant throughout the entire term of your loan, ensuring that your monthly payments remain the same for the duration of the transaction.<\/p>\n

    What is a variable rate?<\/h3>\n

    A variable rate is a rate with a fixed base and a component that fluctuates according to interest rate indices. If rates decrease, your loan rate decreases, and vice versa. Given the current climate, this type of mortgage carries a certain level of risk.<\/p>\n

    Which interest rate should I choose for my mortgage?<\/h3>\n

    Under current circumstances, a fixed rate will almost always be the better option. Indeed, the ongoing rise in interest rates makes fixed rates more attractive, as they allow you to know exactly what your monthly loan payments will be over the next 10, 15, or 20 years.<\/p>\n

    Which loan term should you choose?<\/h2>\n

    Choosing the term of your mortgage is generally a complex decision. The first step is to determine whether you are pursuing a rental property investment or purchasing a primary residence.<\/p>\n

    Indeed, when purchasing a primary residence, your primary goal is often to minimize interest costs as much as possible. However, the longer the mortgage term, the more interest you will pay (not only because the interest rate will be higher, but also because the principal is being repaid more slowly). Therefore, in this scenario, it is more advantageous to provide a large down payment and opt for a shorter loan term.<\/p>\n

    In the case of a rental property investment, mortgage interest can generally be (partially) tax-deductible. Consequently, these costs may carry less weight. However, they remain significant depending on your specific investment objectives. Indeed, if your goal is to generate rapid cash flow from your real estate investment, it may be wise to opt for a long-term loan, allowing for very low monthly payments and enabling you to achieve a break-even operation.<\/p>\n

    Please note that even when purchasing a primary residence, it may be beneficial to opt for a longer-term mortgage to ensure that your monthly payments do not compromise your ability to save or create a financial burden that is difficult to sustain.<\/p>\n

    How does mortgage insurance work?<\/h2>\n

    First and foremost, please be aware that insurance is mandatory; there are no exceptions. Your premium depends on your age as well as a health questionnaire that you will be required to complete. Every detail influences your insurance rate (are you a smoker? Do you participate in high-risk sports? Have you recently experienced health issues?). While the ethics of such questionnaires can be debated at length, it is important to understand that insurance companies are, first and foremost, businesses that need to remain profitable. Consequently, they must protect themselves against potential risks. Please answer this questionnaire with complete sincerity, as any misrepresentation could allow the insurance company to void your coverage or take legal action against you.<\/p>\n

    What is mortgage insurance?<\/h3>\n

    This insurance steps in on your behalf to cover your monthly payments in the event that you are unable to meet them. Please note, however, that the qualifying criteria are strictly regulated, and you must demonstrate mitigating circumstances to be exempt from these repayments.<\/p>\n

    The basic contract provides coverage in the event of death or disability (the principal is then fully reimbursed and, in the event of death, reverts to your heirs). However, your bank may also require you to take out additional insurance policies, such as:<\/p>\n

      \n
    • PTIA: total and irreversible loss of autonomy.<\/li>\n
    • PTD: Permanent Total Disability<\/li>\n
    • ITT: Temporary Incapacity for Work<\/li>\n
    • \u2026Please provide the French text you would like me to translate. I am ready to translate it into professional en_US English following all your instructions.<\/li>\n<\/ul>\n

      Take the time to review the contract proposals, as details can vary from one insurance provider to another (such as waiting periods, for example).<\/p>\n

      *Good to know: you are not required to take out your loan insurance with the same bank providing your mortgage. You have the freedom to choose your own insurance provider! This process is known as insurance delegation.*<\/em><\/p>\n

      Ultimately, which interest rate should you focus on for your mortgage?<\/h2>\n

      While interest rates may seem attractive, they do not reflect the full reality. To truly understand the cost of your mortgage, you must look at the APR (Annual Percentage Rate) and the APRC (Annual Percentage Rate including all costs). These two indicators were established to protect consumers and are generally more meaningful to analyze.<\/p>\n

      Indeed, the APR and APRC include all additional costs (application fees, insurance, taxes, etc.). Therefore, when comparing two offers, be sure to carefully analyze the APR and the general terms and conditions. This will give you a clear understanding of the true cost of your mortgage.<\/p>\n","protected":false},"excerpt":{"rendered":"

      Are you considering purchasing real estate or shares in an SCPI? Whether your property acquisition is intended as a primary residence or a rental investment, your project will invariably be backed by a loan.<\/p>\n","protected":false},"author":1,"featured_media":1762,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[230],"tags":[],"class_list":["post-1816678","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"_links":{"self":[{"href":"https:\/\/www.newzyexecutive.fr\/en\/wp-json\/wp\/v2\/posts\/1816678","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newzyexecutive.fr\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newzyexecutive.fr\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newzyexecutive.fr\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newzyexecutive.fr\/en\/wp-json\/wp\/v2\/comments?post=1816678"}],"version-history":[{"count":1,"href":"https:\/\/www.newzyexecutive.fr\/en\/wp-json\/wp\/v2\/posts\/1816678\/revisions"}],"predecessor-version":[{"id":1816683,"href":"https:\/\/www.newzyexecutive.fr\/en\/wp-json\/wp\/v2\/posts\/1816678\/revisions\/1816683"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newzyexecutive.fr\/en\/wp-json\/wp\/v2\/media\/1762"}],"wp:attachment":[{"href":"https:\/\/www.newzyexecutive.fr\/en\/wp-json\/wp\/v2\/media?parent=1816678"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newzyexecutive.fr\/en\/wp-json\/wp\/v2\/categories?post=1816678"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newzyexecutive.fr\/en\/wp-json\/wp\/v2\/tags?post=1816678"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}