Real Estate Loan Simulation

Real Estate Loan Simulation

You are about to visit an apartment or a house to buy? You want to put all the chances on your side to convince the real estate agent or the owner to choose your file over another? Ask for a real estate loan simulation!

Also known as a financing simulation or real estate loan simulation, this document issued by a bank or broker allows you to estimate the total amount of your future real estate loan and to know your borrowing capacity.

Definition of the real estate loan simulation

A real estate loan simulation is a document issued by a bank or broker that allows a buyer to know the total cost of his future real estate loan. Transmitted to the seller or real estate agent at the time of the offer to purchase, it informs him about your borrowing profile and your debt capacity.

A simulation of a real estate loan reassures the seller and/or the real estate agent about your ability to buy.

Let’s be clear from the outset: a real estate purchase involves a great deal of psychology. More than simply reassuring the seller, you must also be able to seduce him.

To optimize your chances of getting the apartment or house of your dreams, a complete real estate offer to purchase must therefore include a well-written letter, which you can write using a model real estate offer to purchase, a cover letter, a comfort letter… And a real estate loan simulation!

If it is not mandatory, this document proves your ability to buy. In this sense, it is much more complete and transparent than a simple certificate of financing. It also shows that your approach is well thought out, which is a strong argument to start a real estate negotiation. The simulation of a real estate loan is therefore a precious ally to convince the seller to trust you and to distinguish you from your competitors in :

  • reassuring the owner/seller or real estate agent on the solidity of your financial situation ;
  • giving your offer priority consideration over equivalent proposals from other buyers who have not submitted this document;
  • allowing you to make an offer to purchase on the spot, a strong argument in tense markets such as Paris.

The opportunity to properly size your real estate purchase budget

Don’t wait until you fall in love with an apartment before asking yourself the question of your purchase budget and financing… otherwise it will be right under your nose! Indeed, if you realize afterwards that you don’t have the possibility to buy it, you will have lost precious time. The simulation of real estate loan is precisely there to answer the first question that the majority of the purchasers ask themselves: how much can I borrow?

To obtain one, it is strongly recommended to make an appointment with a broker and thus exchange in person on your capacity of indebtedness. His in-depth analysis of your financial situation will allow you to have a much more accurate financing simulation than the one you can do on an online simulator. In addition, this professional will help you get better rates (sometimes even from your own bank!) and thus increase your borrowing capacity.

The appointment with the broker is therefore not a simple formality to obtain a document. This step also allows you to :

  • to determine your capacity of contribution;
  • to know how much you can borrow and thus adjust your budget downwards or, better still, upwards;
  • to list all the additional costs of your real estate purchase (notary fees, work fees, brokerage fees, possible property hunter fees…) and make sure you don’t forget anything in your calculation.

The simulation of real estate loan thus helps you to know your future monthly repayments to the nearest euro cent (excluding insurance). The opportunity to concretize a little more your real estate project!

What information in a mortgage simulation?

A home loan simulation contains a series of specific information, such as :

  • the amount of your future monthly payments;
  • the duration of your mortgage;
  • its total cost;
  • your capacities of refunding, borrowing and contribution;
  • the price of the apartment or house;
  • your future rate of indebtedness;
  • your net monthly income;
  • your net income for the last two years;

Other information may also be included, such as :

  • your family situation ;
  • the number of dependents you have;
  • the rate of your loan;
  • your repayment schedule;
  • the amount of your notary fees;
  • the amount of your work;
  • the amount of your guarantee fees;
  • your other fees.

How to get your real estate loan simulation from a bank or broker?

Good news: most banks and brokers offer to provide you with a financing simulation free of charge and without obligation. This means that you will not be forced to take out your home loan with the bank that issued the document. The time required to obtain it varies according to the issuing institution, which is a good exercise to test the responsiveness of your potential future financer!