Before granting a mortgage, banks must systematically study the borrower’s borrowing capacity, as well as his debt ratio. Buying a home is considered an important project that should not usually be associated with a consumer loan that has not been fully repaid due to the increase in the debt ratio. Rather than waiting for the end of the current loan and the reduction in rates, it is possible to use a car loan to finance a property purchase. Explanations.
What are the possibilities?
In France, more and more households (working in the private sector but also civil servants) are using credits to finance the various projects. However, this funding can accumulate over the years and lead to an increase in the household’s debt ratio. Thus, a car loan that helped finance the acquisition of a new automobile can have an impact on the ability to obtain a mortgage. To grant a new credit, the bank will have to study the situation of the borrower and take into account his income, his charges and also his current credits. The debt ratio threshold is set at 33%.
The borrower cannot therefore exceed this limit in order to be able to apply for a mortgage. The best solution in this case is therefore to reduce the amount of the monthly payment or simply to buy the car under the LOA (as explained by the specialized site Voiturea).
Buy a car loan to finance the mortgage
The principle of buying a car loan is simple: you have your car loan bought back by a specialized bank which will offer to spread the debt over a longer period. This will reduce the debt ratio so that the borrower can benefit from a larger share for their monthly mortgage loan. Consequently, he will benefit from a larger amount and will be able to realize his real estate project. It is not a question of reducing the monthly payment of the car loan to make room for the mortgage, but rather of adding these two credits.
Obviously, the financial institution must study the project and check the key elements like the rest to live, that is to say the amount remaining on the bank account after deduction of loan charges. It is more advisable for the applicant to consult the sites specialized in finance or to seek advice in order to know the advantages and disadvantages of this option. It should be noted that the loan repurchase procedures are free and without obligation for the borrowers. It is possible to start a simulation on specialized sites before launching the process.