What salary to borrow 200,000 euros in mortgage loan?

200,000 euros is the average amount that individuals borrow to acquire their main residence. It is also the price of a 1 or 2 room apartment in the Paris region, or a 3 or 4 room house on the outskirts of medium-sized towns.

In other words, a home loan of 200,000 euros covers the needs of a majority of borrowers. Banks, for their part, are used to granting this type of amount. But, what salary does it take to borrow 200,000 euros?

Use a simulator for a mortgage of 200,000 euros

This must be the borrower’s first instinct. Whether the mortgage is done alone or as a couple, using a mortgage simulator allows you to quickly find out what income is needed to borrow 200,000 euros. Buying a primary residence is arguably the most important loan, and often one of the first bank loans in life.

Home loans, unlike consumer loans, are given over a long period. They therefore make it possible to have a substantial loan amount. But it should be kept in mind that the longer the term of a mortgage, the more expensive the loan. Finally, with the health and economic crisis, borrowing over 30 years is becoming less easily accessible.

We are therefore going to carry out simulations to find out the income required for a loan of 200,000 euros, over periods ranging from 15 to 25 years. For this, we take into account the average interest rates of mortgage loans, as well as the average cost of borrower insurance. A good record, with a good negotiation, can hope to borrow more for the same monthly payment, or to shorten the duration of the mortgage.

A few examples are better than a long speech. Here is therefore, for a mortgage of 200,000 euros made in January 2021, the monthly payments and credit term to expect:

  • Over 25 years: monthly payments of 840 euros per month for a total credit cost of 52,200 euros, insurance included
  • Over 20 years: monthly payments of 980 euros per month for a total credit cost of 35,400 euros, insurance included
  • Over 15 years: monthly payments of 1,240 euros per month for a total credit cost of 23,300 euros, insurance included

Do you think you can afford one of these monthly payments? This is probably the case if you are already paying equivalent rent on a regular basis. And it is also a strong argument to put forward with your banker, who will talk to you about “debt ratio”.

Real estate loan of 200,000 euros and debt ratio

The simulation explained in the previous paragraph has undoubtedly already put the chip in your ears. The salary needed to borrow 200,000 euros can ultimately be very variable, since the duration of the mortgage on which we can play has a strong impact on loan maturities.

Thus, the more the mortgage is thought over a short period, the more the household income must be important. On the contrary, by extending the duration of the credit, the resources may be lower. Between 840 and 1240 euros, it’s almost a third more …

This is when it is necessary to calculate your debt ratio. Even more important than the concept of salary, it gives the bank a precise indicator of your repayment capacity. The lower your debt ratio, the more you have left to live and the more you will be able to meet your credit payments.

Except in special cases, especially if you are a civil servant or have a very high income, the debt ratio should not exceed 33%. This indicator takes into account your regular income on the one hand, and your recurring expenses on the other.

Assuming that you want to borrow 200,000 euros over 15 years and already have an outstanding car loan for a monthly payment of 300 euros, your salary must be three times the amount of your bank loans:

  • You have to pay installments of 1,240 euros and 300 euros, for a total of 1,540 euros per month
  • You must therefore have a minimum salary of 4,620 euros (3 x 1,540)

If you want to borrow over 25 years and you have no current loan, the calculation is different:

  • You must pay installments of 840 euros per month
  • You must therefore have a minimum salary of 2,520 euros (3 x 840)

It is easy to understand, with the help of his examples, that the notion of salary is not the most important to obtain a mortgage of 200,000 euros. Your debt ratio, the composition of your household, the amount of your personal contribution, your professional and financial stability will have a direct impact on your access to the loan.

Obtain a real estate loan of 200,000 euros at favorable conditions

Once you have estimated the feasibility of your project based on your personal situation, your income and your debts, you can move on to the research phase for your property.

Are you about to sign a compromise or have already done so for an apartment or a house for 200,000 euros, or even a little more thanks to your contribution? You must now take out the mortgage to become an owner!

With this in mind, using an online mortgage comparator is an excellent solution. In a few clicks, you will have access to the best proposals on the market. All that remains is to take care of your case to obtain your loan of 200,000 euros under the most advantageous conditions possible.

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