The 3 steps to be done before signing the “compromis de vente”

Most of the people think that buying their home is really easy. They start visiting, then spend more and more time during lunch time, after works. Finally they find out a convenient property, go to their bank whom refuse to give the adequate loan. This is an example, it is also part of my personal experience.

So, what are the main steps to be done ?

The first step is : TRAINING and INFORMATION

As you are reading these lines, you have realised the step of information. Congratulations!You are laready more advanced than the average guy in the street.

Your information is indispensable because in order to optimze your search, you need to know the market structure, for example :

the most demanded geographical areas (where you will find more competition between buyers),

the most offered housing types (surface and number of bedrooms),

of course the asked price per m2 (classifieds) and sold ( chamber of notaries statistics and Statec with some delay)

 or the buyer’s income structure, I mean how many people are looking for a housing in the same price range as yours: there will be a lot of competition for housing in the range of EUR 500,000 to EUR 700,000 compared to the range EUR 1,500,000 to EUR 1,800,000.

The consequence is that the tips to be used for example to book visits, or to negotiate will not be the same.

The lower your budget price range is (when I say low, everything is relative), the more it will be efficient to put in place routines and strategies I am sharing with you. However, when a property is proposed on the market at a market price, it can be sold at the first visit, or even by phone before anyone has visited it!

Your need for training/information is depending of your knowledge and your actual situation.

Your training could be related to « how to get your personalised financing », « how to face the banks and to sell your case during the conversation »,

It can be also about the art of negotiation (with the seller, with the various companies you will appoint to refurbish the property),

It can lead to develop your knowledge related to the « compromis de vente and the notarised agreement,

Or even it can be about the tax implication of the consequences of purchasing your home.

This remain an indicative list and I will do my best to support you following your needs.

Your training is important because the knowledge you have gives you a competitive advantage to the others when you will take your decision : the better you will be trained and informed, the quicker you will take the best decision and faster than the other people interested like you for the same property.

2nd step : Clean up your financial statements and stabilized at a satisfactory level.

Except the case you have plenty of income affording you to cumulate revolving credits (although this situation is not sustainable, you could as much as possible cut this kind of financing. When I say « as much as possible » but like me, the banker can also understand the need of making a credit to renew your car for example. However, if you are using your credit to buy a new flat screen, going for holidays, then the banker will not tolerate that situation. That’s why it is really important to clean up your accounts BEFORE going to the bank and present your project.

So, How to cut this bad debts the more efficiently ?

1 Read again the credit contract. You should find out the possibility to reimburse by anticipation or making majored reimbursements.

2 Asign a part of your monthly savings to the reimbursement of your credits (for example EUR 100)

3 Start to reimburse the credit which is costing you the more interests and fees every month. If you have a monthly cost of EUR 150 with a revolving facility at 18 % and a EUR 250 monthly installment of consumer credit at 5 %, start with the revolving credit. So in this example you will spend EUR 150+100 every month to clean up this debt.

4 Once the first debt cleaned, then assign the amount of this first monthly installment and your savings (150+100) to clean the next debt.

5 Of course at the same time, you have stopped to use your revolving facilities and consumer credit allowances, and you must put an end to this kind of credit card !

6 Once everything reimbursed, you assign the amount of the old installments to your savings (in our example : 150 + 250 +100 EUR). I remind you that EUR 500 monthly is enough to reimburse EUR 100 000 during a payback period of 20 years with an interest rate of 1.70%.

3rd step : The bank statement of account presentation.

Like the companies making « year-end window dressing » , this is also important for you to set up your statement of account properly.

Having perfect bank statements does not mean earning EUR 10,000 and more each month. Banks prefer prospects earning less but who are managing their account safely versus big earning pouring money down the drain.

You need to go to the bank meeting to ask for a loan with bank statements clean of bank charges during the last three months. The monthly statement positions will always be in the black.

You should show that you are able to make monthly savings (and you are doing it!). Even small amounts. 10% of your net income is a good start. If you can do more, it will be of course better. This will show you are a serious person and involved in your bank account management. If you clean up your debts following the above methodology then you will be on track.

What are currently your main concerns ?

How do you think your life will be in 6 months without any action ? What could be you and your beloved life once you hve removed your current concerns?

Are you struggling in your home search ?

Are you seeking for a personal advice, a support in your home search ?

Feel free to let me know your thoughts,

David

david@achatimmobilierluxembourg.com

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