Fixed. Debt ratio, choosing a bank … How to get financing for a second home

Desires for spaces, the outdoors, remote work elsewhere… After the end of the first confinement, many French people proceeded to purchase a second home.

While demand for this type of property rose 30% between 2019 and 2021, it fell 7% between January and April 2022, according to data from mortgage broker Brito.

Reasons: the international context, high prices and credit rates … After the madness of 2021, the real estate market is experiencing a certain calm. However, demand remains strong. Do you also want to embark on such a purchase with the help of a mortgage? Find out how to get the best financing.

It’s better if you already own your main residence

According to Pretto, among its clients, more than two-thirds of second home buyers already own their primary residence.

This is not your situation? The broker asserts that “the tenants of the main residence will have fewer opportunities for financing because, in the eyes of the banks, it does not make sense to combine the monthly loan repayment with the rent in their main residence.” In fact, unlike a rental investment, buying a second home does not generate additional income up front.

Have at least 10% contribution

Banking institutions are often more in demand at the level of the amount they contributed to the project to finance a second home than another type of project.

Have a debt ratio of less than 35%

Even for secondary residence, it is necessary that the level of indebtedness be less than 35%. HCSF guidance also specifies that 80% of the depreciation margin (i.e. funded files above the 35% debt limit) should be set aside for prime housing financing. An imposed practice that banks abide by.

Show the bank that it won’t be… secondary

For borrowers who already have a mortgage, for example for their main residence, it is better to place two loans in the same bank to ensure a more interesting overall relationship for them.

Then there are two possible solutions: financing his secondary residence in the same bank as his main residence or offering to buy back his primary residence loan by a bank that is able to finance the secondary purchase. “With credit rates high, there is little chance that this acquisition will materialize, but the simple fact of his proposal is a good signal being sent to the new bank, assures Brito. In this case, offering a savings transfer as well as further embellishing the loan application is a good idea. Always. “