Home building credit

Banks finance individual projects and grant a home building loan when the project is carried out under the aegis of a CCMI (single-family home construction contract). Other than this, the rules are the same as for any mortgage: the future debt ratio must not exceed one third of the income, and repayments are generally made at a fixed rate.

Which builder to get a construction credit

Banks prefer to finance houses constructed via a CCMI. This type of contract is governed by strict regulations. The builder must benefit from a guarantee of completion, which ensures the lender that the house will actually be completed, and the CCMI signer is an architect or promoter, holds civil liability and damage insurance book 10 years.

In practice, the borrower brings the land, and the builder builds the house. The bank therefore grants a building loan for both the land and the building, and offers several formulas to adapt to the customer’s ability to repay.

The three construction credit formulas

The borrower can choose between three building credit formulas for home, depending on his repayment capacity. The first case: if its resources allow it to bear both the rent of its current housing (or the interests of its current property loan) and the interest of the construction loan, the bank unlocks the credit line in one go. The borrower begins to amortize from the first monthly payments.

At each unblocked sum, the borrower pays a so-called monthly interim interest to compensate the bank for the money made available to it pending the completion of the work. The construction code imposes a 5% deduction of the price of the project until the buyer has accepted the delivery; once the house has been accepted and declared no flaw, the bank releases the remaining 5%. From this moment, the owner will pay monthly installments, and begin to amortize his home building loan.

The third possibility is to grant a full carry-over of interim interest, in addition to the deferral of monthly payments. This solution is only used if the repayment capacity of the borrower is not sufficient.

Getting a building credit for a home

Construction credit for a home will only be granted if the future lease rate of the homeowner does not exceed 33% of its net taxable income.

The duration of the repayments is thus adjusted so as to obtain the ideal scenario, so as not to place the borrower in a delicate financial situation. Banks offer the three tips of rates: variable, fixed or mixed.