May 17, 2020

Home loan and obligation to domiciliate wages

Bank domiciliation consists of repatriating the management of its bank accounts and its income within the bank which grants the mortgage. The domiciliation of income and bank accounts is not compulsory in the context of obtaining a mortgage, however, it can allow obtaining more advantageous conditions.

 

The principle of domiciliation of bank income

bank loans

A borrower who files a mortgage loan application in a bank or a credit institution will be offered financing with generally the domiciliation of his wages and the management of his bank accounts within this same institution. This is commonly known as direct debit. A bank that successfully repatriates the subscriber’s accounts within its branch may invoice the management of bank accounts but also offer complementary products such as savings, investments, life insurance, or even conventional insurance (home, car).

However, a recent law dating from January 1, 2018 (ordinance n ° 2017-1090 of June 1, 2017, relating to mortgage loan offers conditional on the domiciliation of wages or similar income of the borrower on a payment account) has made it possible to legislate the principle of bank domiciliation in order to avoid abuse by banks and not to oblige borrowers to compulsorily repatriate the domiciliation of their salary within the bank which grants the mortgage. Since that date, banks which impose the domiciliation of bank accounts are forced to offer an individual advantage for the borrower justifying this requirement, it may be an interest rate (APR) significantly lower than the competition, booking fees offered or any other advantage that the borrower cannot obtain elsewhere.

In addition, the domiciliation of accounts can not last more than 10 years, that is to say, that the borrower who obtained a preferential condition by repatriating his bank accounts will be able after 10 years to change the bank while preserving this advantage.

 

Obtaining a home loan without domiciliation of income

home loan without domiciliation of income

Obtaining a mortgage without being forced to domiciliate your income within the bank which offers this financing is therefore possible. You just need to submit a request to a credit institution or a bank agency offering attractive financing but specifying your wish not to domiciliate your bank accounts with this bank. Simply the direct debit is a real asset for a bank that offers long-term financing, especially when the profile of the borrower is in the target of banking establishments.

Thus, a bank that offers a home loan offer with an individualized benefit that meets the requirements of the legislation of January 1, 2018, may perfectly require the borrower to repatriate his bank accounts and it is income within the agency. It must be admitted that the banks prefer to grant an additional and distinctive advantage to finance the file rather than leaving the management of the accounts to a competing bank.

To sort out the banks granting home loans without direct debit and the banks which grant more advantageous conditions than others, it is strongly advised to carry out a simulation of home loan online. It is a service that is offered free of charge and without obligation by mortgage loan specialists.

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