In the absence of liquidity, or for want of wanting to use it, taking out a mortgage without contribution, also called senior credit at 110%, is quite possible for seniors, depending on the quality of the profile and the level of guarantees.
The personal contribution is intended to pay the additional costs
The banks attach great importance to the characteristics of the profile of a person, whether senior or not, who applies for a mortgage without personal contribution. Especially since this sum of money, which is used to pay part of the real estate transaction, is a guarantee that supports the file. In the most widespread cases, this liquidity contributes to closing part or all of the notary fees estimated between 8 to 10% of the price of an old home.
If the contribution is not compulsory in a period when the borrowing conditions have become considerably more flexible, the fact remains that not everyone can be eligible for the financing of housing on credit without this financial effort. In exchange for agreeing to validate a home loan without contribution, the bank will undoubtedly want to tip the balance at a balanced level by requiring certain conditions. For example, the borrower may be offered a domiciliation of income or retirement or even the purchase of home insurance to complete the purchase of the property.
Now, not all borrowers are in the same boat when it comes to the proposal they will receive. More specifically, the margin of negotiation for a mortgage will depend largely on the income and assets of a household. The better the financial situation, the better the loan conditions will potentially be.
110% senior mortgage
Despite an older age than working people, banking establishments can accept to finance a housing project after 60 years without a personal contribution if they obtain in return guarantees that they seem sufficient. Consequently, in the context of a request for a senior real estate loan, what will count is without context the amount of retirement pensions. The home can sometimes even bring to the negotiating table the presence of real estate and financial assets which will obviously count in the bank’s decision.
Of course, it is still advisable to make a personal contribution in order to reduce the amount of the mortgage which will have to cover, on the one hand, the full price of the property, and on the other hand, the notary fees associates. This type of operation even has a name since it is nicknamed the 110% mortgage. With a higher capital to borrow, the household will have to repay more interest and will potentially have to increase the duration of the loan so that the level of debt is kept under the 33% mark. To this must be added the very high cost for seniors of credit insurance which covers the mortgage in the event of death during the life of the contract.