Real estate credit: surprise, the rates of online banks often better than those of traditional banks
Real estate credit: surprise, the rates of online banks often better than those of traditional banks

They continue to refine their offers. Online banks are trying to impose themselves a little more on the mortgage market by offering more flexibility to the borrower. Latest proof to date, Fortuneo (Arkea Group), which has been marketing housing loans since 2017, has announced that its offers will now be able to finance sales in the future state of completion (Vefa), also called off-plan sales. The borrowing floor was also trimmed, from 100,000 to 80,000 euros. Hello Bank! has increased its loan term range, and it is now possible to take out a loan over 2 years in the establishment (compared to 3 previously). Still absent from this market until then, Monabanq announced at the end of 2019 that it was entering this crucial and strategic market for banking establishments.

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While average mortgage rates are still at very low levels, - 1.27% in June 2020 (excluding loan insurance) on the most common term of 20 years - some banks offer even better rates, forcing the competition to line up to continue to garner customers. While online banks still had a good lead 3 years ago on the mortgage rates offered (between 0.2 and 0.4 points less) compared to traditional establishments, it is clear that it has melted like snow in the sun.

Obviously, the quality of a mortgage is not measured solely by the yardstick of the rate offered, but also of the personal contribution necessary, the interval of loan duration, or even the minimum amount of the loan. The fact remains that the cost of credit is one of the most decisive components in the choice of customers. And online banks still look attractive according to our comparison table (see below). Because with nominal rates (i.e. including only the bank's interest) oscillating between 0.76% and 1.28% over 20 years as of June 2020, three of the six banks studied made it possible to obtain interest below the national average. These are Fortuneo, BforBank (Cr├ędit Agricole) and Boursorama (Societe Generale). The latter prides itself on offering fixed rates "among the lowest on the market" and an average rate 0.5 points lower than the national average. ING arrives very slightly above the national average with 1.28%. As for Hello Bank! (BNP Paribas), the establishment did not communicate its average nominal rate, but specified that the range is between 1.20% and 1.85% with the rates in force on August 1st. This places the establishment, de facto, above the national average.

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If for several years, online banks have aligned themselves with each other on the same loan durations (between 7 and 25 years), it is clear that the range has widened, and that it is possible to subscribe 5-year loans at Monabanq, or even 2 years at Hello Bank! The minimum loan amount varies between 30,000 and 100,000 euros. High floors that can exclude small borrowers wishing to finance inexpensive projects. Exception in this landscape, Hello Bank! (whose loans are granted directly by its shareholder BNP) markets home loans from 10,000 euros.

>> Our service - Find the cheapest mortgage with our comparator

Quite flexible loan granting conditions therefore, but also competitive rates, which can even be reduced if the customer meets a few conditions. If no personal contribution is required in most cases, having 10% of personal contribution allows for example to lower by 0.1 point its rate at Hello Bank!. Similarly, since domiciliation of income in the bank is no longer compulsory for the customer, establishments have developed a rate reduction system to encourage customers to create an account there and deposit their money: 0.1 point less at ING , and even 0.2 points at Hello Bank!. With the latter, a customer with a 10% contribution and domiciliating his income therefore benefits from a discount of 0.3 points. If he were to borrow at a nominal rate of 1.2% over 20 years, interest would eventually drop to 1%, ultimately positioning him well below the market average.

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Save time, but limited projects

Obviously, the other big advantage of online banks comes from saving time. No need to multiply the appointments in the agency to obtain the loan, because the operation is completely dematerialized.

Please note, however, that the credits are above all reserved for simple projects. No need to try to couple the loan with a zero interest loan because the loan will be judged as too heavy administratively by the establishment (except at Monabanq). With the exception of Hello Bank! - whose loans are directly granted by the BNP -, the financing of land, parking, construction work, SCPI or tax exemption are simply not offered. Investment in Pinel is refused by ING and Fortuneo. Sales off plan (Vefa) are only authorized by Boursorama, Hello Bank! and recently by Fortuneo, while cash purchases (acquisition of real estate shares from a spouse during a divorce, or from a relative during an inheritance) are only possible at Fortuneo and Hello Bank!. Prefer this type of credit for projects, such as the purchase of a main or secondary residence.

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>>Also read - Real estate credit: how the property tax is equivalent to an additional monthly payment

How to get a home loan from an online bank?

  • Use the simulators, alone or through a broker

The first step is to study its eligibility by carrying out a simulation. Comparators help with this, and the brokers then take care of building your file with the bank that offers the most interesting loan. You can also compare yourself, directly on the banks' sites, using their respective simulators. In particular, you will need to provide information on your family situation, the amount to be borrowed, your personal contribution and your net income.

Once your file has been studied, the bank will contact you to announce an agreement in principle. This agreement has no contractual value. It must be formally finalized for the property to become your property.

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  • The constitution of the file

Then comes the time to compile your file and provide the supporting documents. It is therefore necessary to digitize the documents: statement of accounts, promise of sale, professional situation and payslips in particular. No need to go to an agency, since it does not exist, except in the case of certain historical actors. You can still talk to an advisor via a hotline, by email, or by instant chat.

  • The official loan offer and the withdrawal period

This is the official document, sent by the bank. It summarizes all the information relating to your loan. Once received, you have a period of at least ten days to withdraw. You must return the signed document to the bank for the loan to be triggered.

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It is this document that allows you to become the definitive owner of your property. It is provided by a notary, and you must sign it. You will then finally receive your title deed.



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