Analysis of the debt ratio allows lenders to make an initial decision as to the admissibility of a loan request. This analysis is also followed by an in-depth evaluation which includes the study of the revenues as well as the calculation of the borrower’s scoring thanks to which the lending institution will decide whether or not it agrees to finance the project.
After analyzing the debt ratio, the bank assesses the subscriber’s income in order to anticipate their financial situation when they have to repay their monthly payments. These income criteria are essential to continue studying the file. They include several elements: firstly, the “remainder to live”, which corresponds to the share of income remaining in the household to finance its current expenses once it has paid its borrowing costs. In addition to the “remainder to live”, the “family quotient” is also evaluated. Corresponding to the annual disposable income per person, this family quotient is determined by the ratio between the net income excluding borrowing costs and the number of people in the household. Finally, the bank studies future household expenses.
Calculation of the borrower’s score
To decide whether to accept or refuse a file, the bank will continue its evaluation by developing a scoring. Established on a set of qualitative criteria, it will give a rating to the future borrower, indicating the quality of his file. This score will assess the level of risk taken by the bank if it agrees to lend the money necessary for the acquisition of the property. Variable from one bank to another, it is established on significant criteria such as:
- Personal contribution: between 10 and 30% (riskier below, less profitable above)
- The professional situation: the employment contract, length of service
- The duration of the loan: between 15 and 20 years (less profitable below, more risky above)
- Age of subscribers: ideally between 25 and 50 years old
- The family situation: considered to be “stable” during the term of the loan
Not having a personal contribution or being in a precarious work
The situation does not necessarily constitute an obstacle to obtaining a loan. These are all the criteria together that will determine the overall score of the scoring. If the score is too low, the file will have a good chance of being rejected, on the other hand, a high score will make it possible to obtain more advantageous borrowing conditions.
Furthermore, depending on the scoring score obtained, the bank will be more or less demanding on the guarantees required.
Our advice: to carry out your loan search, do not hesitate to be accompanied by an Best Lenders broker. Real credit specialists, they are in the best position to defend your file with banking organizations, thus allowing you to increase your chances of obtaining a loan at the best conditions.