First-time buyers · Guide
Buying at auction with a mortgage: what must be settled before bidding
Bidding with a mortgage: ten questions before the session, the real time a loan takes, and what to do when the payment deadline is too short.
Buying at auction with a mortgage is only feasible if the financing is prepared before the session. The payment deadline, the deposit amount, and the provision for a loan condition must be requested in writing from the professional conducting the sale. A mortgage takes weeks to arrange: if this period exceeds the payment date, only funds already available can meet the deadline.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
Key points
- The rules of an auction sale cannot be guessed: they must be requested, in writing and before the session, from the professional conducting the sale.
- A mortgage takes weeks to arrange, and the acceptance of a loan offer cannot occur before the expiry of a legal deadline.
- A proof of financing is prepared before the session: it is not a loan offer, but it certifies that a file has been examined.
- When the payment deadline is shorter than the time required to arrange a mortgage, only funds already available can meet the deadline.
- The price is not the cost: fees borne by the buyer, loan guarantee, works, and potential release of the premises must be quantified before bidding.
At auction, a loan is only valid if it is ready before the session. Ask the right questions, have your file examined, then compare the payment deadline with the actual time required for a loan. A guide to the file for first-time buyers.
Why everything is prepared before the session
Before the session, the price is not known. The payment deadline and the place of the loan are asked to the professional who conducts the sale.
In a classic purchase, the loan suspensive condition applies by default, with a minimum duration.
Cette durée s'applique, selon l'article L. 313-41 du code de la consommation, à l'acte que vise ce texte lorsqu'il indique que le prix est payé, directement ou indirectement, même partiellement, à l'aide d'un ou plusieurs prêts régis par les sections 1 à 5 et 7 du chapitre où figure cet article. Elle court à compter de la signature de l'acte, ou de son enregistrement s'il s'agit d'un acte sous seing privé soumis à peine de nullité à cette formalité. C'est un PLANCHER, et non une durée usuelle : les parties peuvent convenir plus long.
- En vigueur depuis le
- Source
- Article L. 313-41 du code de la consommation — Légifrance
At auction, nothing states that it has its place: this is question 6. If it exists, see how to draft it.
Ten questions to the notary or lawyer before bidding
- Which document sets the conditions of the sale, and from when can it be consulted?
- Must one be represented to bid, and by whom?
- Must a sum or a guarantee be deposited beforehand? In what form, when?
- What happens to this sum if the bid fails, or if the payment does not arrive?
- On what exact date to pay the price, and from which event?
- Is a loan obtaining condition admitted? Without presuming the answer.
- Can the bid be exceeded after the session? And then what?
- What fees are added to the price, paid by whom, and when?
- What happens if you pay late?
- Is the property occupied, and can it be visited beforehand?
Have yourself answered in writing. Start with questions 3, 5, 6 and 8: they tell you when you need funds.
What a lender must have seen before the meeting
A complete file, a covered transaction amount, and its requirements regarding the property. An agreement on a theoretical envelope offers no protection on the day of the auction.
The documents are those of any purchase: the file item by item and the documents to gather. This is the longest part: start there.
The loan term is capped (the debt ratio).
La maturité additionne la période de différé et la période d'amortissement. Ce critère s'ajoute aux critères propres de chaque établissement. La même décision tolère, dans les cas qu'elle énumère où l'entrée en jouissance du bien est décalée par rapport à l'octroi du crédit (vente en l'état futur d'achèvement, contrat de construction d'une maison individuelle, contrat de promotion, achat dans l'ancien assorti d'un programme de travaux qui atteint une part minimale du coût total et répond à un objet qu'elle définit), un différé d'amortissement d'une durée analogue à ce décalage, qui porte la maturité au-delà de ce plafond, dans des limites qu'elle fixe à la fois pour la maturité totale et pour la durée d'amortissement ; elle ouvre aussi une marge de flexibilité qui permet aux établissements d'y déroger pour une part limitée de leur production trimestrielle de nouveaux crédits immobiliers. Allonger la durée n'est donc pas une variable d'ajustement illimitée.
- En vigueur depuis le
- Source
- Décision D-HCSF-2021-7, art. 1er — Légifrance
Announce the auction sale to the bank from the outset: if discovered after the fact, it may cause the processing to start from scratch.
The proof of financing is not a loan offer. In the room, it gives you a ceiling not to be exceeded. And no intermediary is paid before the disbursement of funds:
Aucune somme représentative de provision, de commissions, de frais de recherche, de démarches, de constitution de dossier ou d'entremise quelconque ne peut être perçue avant le versement effectif des fonds prêtés. Le jalon est le déblocage, pas l'obtention d'un accord ni la remise d'une attestation. La règle vise toute personne qui apporte son concours, à quelque titre que ce soit, à l'obtention ou à l'octroi d'un prêt d'argent.
- En vigueur depuis le
- Source
- Article L. 519-6 du code monétaire et financier — Légifrance
The true duration of a loan, to be compared with the payment deadline
Weeks, and the chain does not compress: file, assessment, offer, statutory period, acceptance, release of funds.
- The file: the only step you control.
- The assessment: weeks. If incomplete, the file starts again from the beginning.
- The principle agreement: not yet an offer.
- The offer, followed by a period during which you cannot accept it.
- Délai de réflexion de l'emprunteur 10 jours
- Maintien minimal des conditions de l'offre 30 jours
Deux durées distinctes dans le même article du code de la consommation. La première se compte à partir de la réception de l'offre : avant son terme, l'emprunteur et les cautions personnes physiques déclarées ne peuvent pas l'accepter, et personne ne peut l'abréger. La seconde oblige le prêteur à maintenir les conditions indiquées dans son offre, à compter de sa réception par l'emprunteur.
- En vigueur depuis le
- Source
- Article L. 313-34 du code de la consommation — Légifrance
Final step: the returned acceptance, then the funds released (the offer deadline).
Does this total exceed the date in question 5? The loan does not meet the requirements of that sale.
Deadline too short: only an available sum pays
Truly free savings, family aid already paid, bridge loan whose funds are already there. None of this can be improvised in the week of the sale.
- Available savings are truly available: date the transfer before bidding. Blocked employee savings do not count (releasing them).
- A bridge loan is a loan, with the same schedule. Up to a certain amount, it is excluded from the effort rate.
La quotité se calcule comme le rapport entre le montant du crédit relais et la valeur du bien mis en vente, nette le cas échéant du capital restant dû sur le prêt encore en cours sur ce bien. La comparaison est large : l'égalité au seuil ouvre l'exclusion. Cela n'accélère rien, mais cela change ce que la banque peut accepter.
- En vigueur depuis le
- Source
- Décision D-HCSF-2023-6, art. 1er, 2. — Légifrance
- A property for sale is not an available sum.
The true cost: the price, plus four lines
| Line | Who estimates it |
|---|---|
| Costs and fees borne by the buyer | The professional conducting the sale |
| Loan guarantee | The lending institution |
| Works | A building professional, based on what you have seen |
| Vacating the premises, if the property is occupied | A lawyer |
Add them up the day before, and compare with an equivalent property purchased by mutual agreement (the costs of a purchase).
Four pitfalls specific to the property
- The poorly known property: deduct a works budget from your maximum price (works in the loan).
- The occupant: by whom, and on what basis? To vacate the premises, a lawyer.
- The co-ownership: charges, and who pays the arrears.
- The sale file: read it in its entirety.
The legal regime of the sale falls under the notary, a lawyer, or the ADIL (who to approach). The credit, however, is prepared here: compare the payment deadline with the loan schedule or go through contact.
Create your file before the session, not after.
Sources
- Article L. 313-41 du code de la consommation — Légifrance
- Article L. 313-34 du code de la consommation — Légifrance
- Légifrance — Article L. 313-1 du code de la consommation
- Légifrance — Article L. 313-24 du code de la consommation
- Article L. 519-6 du code monétaire et financier — Légifrance
- Décision D-HCSF-2021-7 — Légifrance
- Décision D-HCSF-2023-6 — Légifrance
- ANIL
Read next
- How much can I borrow? Mortgage capacity in Lyon
- Mortgage financing condition: the four figures that protect you, and how to set them Drafted before the bank has spoken, the clause decides everything if the loan is refused: the four figures to include, how to set them, the wording to add.
- Proof of funding: what it is really worth, and how to obtain it Requested by the agency before the viewing, the proof of funding does not bind any bank. The seven lines that give it weight, and how to obtain it.
- Bridge loan: how it works, its 3 forms and what to do if the property does not sell Buying before selling: dry bridge, secured bridge or buy-to-sell, what the bank actually advances, and the outcomes if your property takes time to sell.
- Ancillary costs of a property purchase: the complete list of what is paid in addition to the price Deed costs, credit costs, property costs, installation costs: the four categories of costs added to the price, who calculates them, and who pays them.
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