Mortgage Credit in Morocco: The Mini-Lexicon to Speak the Language of the Pros

Buying a house or an apartment is a dream for many people, but how do you make this project a reality without being a millionaire? The answer is simple: mortgage credit! If you're not familiar with terms like "interest rate," "duration," or "borrower's insurance," don't worry, that's perfectly normal.

In this article, we'll guide you through the key terms of mortgage credit in Morocco so you can obtain your loan and realize your dream of homeownership, without having to sell your left kidney. So, buckle up, we're going on a journey!

What is a Mortgage Credit ?

Mortgage credit is a loan provided by a bank to finance the purchase of real estate. You are the borrower, meaning the person who applies for the loan from the bank. You repay the loan over a set period and at an interest rate determined by the bank.

Mortgage credit is a solution that can help you realize your real estate project without needing the total amount required upfront. However, before embarking on this adventure, it is strongly advised to be well informed about the different mortgage credit offers available on the market. This will allow you to make the best choice and benefit from the best loan conditions.

Essential Terms to Know for Obtaining a Mortgage Credit in Morocco

To successfully obtain your mortgage credit in Morocco, it's important to know certain essential terms. Don't worry, they're not as complicated as they might seem.

The Mortgage Credit Survival Kit

To help you understand the ins and outs of this adventure, let's first decrypt the basics:

Loan : This is THE building block that will allow you to construct your real estate project. The bank lends you a sum of money to finance your property and thus make your dream of homeownership a reality.

Borrower : That's you, the ace of mortgage credit! Your borrower profile and your repayment capacity will be scrutinized to determine if you are eligible for mortgage credit.

Interest Rate : This is the price to pay for borrowing money. The interest rate will determine the total cost of your mortgage credit. The lower it is, the more you save. A tip: be smart, hunt for rates !

Duration : This is the period over which you will repay your loan. It's a bit like the lifespan of a flower: the longer it is, the more you can enjoy your property by paying lower monthly installments. But remember, the longer the duration, the more interest you will pay. So, it's up to you to find the right balance !

Borrower's Insurance : This is your superhero in case of trouble! This insurance protects you in case of job loss or disability. It's an additional security to repay your mortgage credit in case of hard times. But be careful, it can have a significant cost. Check the guarantees offered before signing.

Terms for Going a Bit Further :

Let's delve deeper into the world of mortgage credit and explore some more specific terms:

Personal Contribution : This is the sum of money that you can put on the table for your real estate project. The more personal contribution you have, the less you need to borrow from the bank, which is always a good thing.

Repayment Duration : This is the period during which you will repay your mortgage loan. You can choose a longer duration to reduce your monthly payments, but this means you'll pay more interest in the long term. Think carefully before choosing your repayment duration!

Application Fees : Imagine that application fees are the cost of a ticket to board the train of your loan. The law oversees the size of your ticket, meaning you'll pay 0.1% of the amount you borrowed, regardless of whether you travel first class or economy.

Mortgage Credit in Morocco : Terms to Speak Like a Pro

Now that you've mastered the fundamental terms, let's move on to terms that may seem complicated, but are key terms you need to understand to avoid unpleasant surprises.

Financial Acronyms : Letters That Say a Lot

First, let's talk about acronyms. If you don't want to be seen as a beginner, it's essential to know the key acronyms.

APR (Annual Percentage Rate): This is the percentage you will pay for a credit or loan. And no, it's not just the interest rate! The APR includes all fees related to the credit or loan. Now, you're ready to shine in your next loan discussion!

AER (Annual Effective Rate of Insurance): This term indicates the insurance rate that you can add to your loan. It is expressed as an annual percentage and gives you an idea of the total cost of the insurance over a year. So, don't forget to take the AER into account when choosing insurance for your loan.

Global Effective Rate : This rate encompasses all costs related to a credit or loan, including application fees, interest, and insurance. So, if you really want to know how much your credit will cost you, look at the Global Effective Rate rather than just the interest rate.

FICP (Personal Credit Repayment Incident File): This isn't a music group, but the File of Incidents of Repayment of Credits to Individuals. If you have delays or defaults in credit payments, you risk being registered in this file. And believe me, that's not a place you want to be! This registration can negatively affect your ability to obtain a new credit or loan in the future. So, make sure to repay your credits on time!

Financial Anglicisms : Financial Jargon Made in the USA

English financial terms may seem cool and sophisticated, but they can also make you look like a novice if not used correctly:

Credit Score : It's a bit like your kindergarten report card, but for adults. The credit score is an indicator of your solvency and credit history. The higher your score (a high score), the more banks and lenders consider you as a responsible and reliable borrower. In short, it's the score that shows whether you're a studious pupil or if you spend more time playing at recess!

Loan to Value : Imagine you're playing Tetris, but with banknotes. Loan to Value, or LTV for short, is a ratio between the value of your mortgage loan and the value of your property. The lower the LTV, the more personal money you have put in, and therefore the less you need to borrow. A high LTV can be risky, as it means you've borrowed almost the entire value of your property. Be careful, it's like stacking Tetris blocks, if you're not careful, you risk losing!

Refinancing : It's a bit like a wardrobe change, but for your mortgage loan. Refinancing is the process of replacing an existing mortgage loan with a new loan, often with better terms and a lower interest rate. It's like trading your old torn jeans for a new, super comfortable pair! Refinancing can help you save money on your monthly payments and reduce the duration of your mortgage loan.

Expressions to Impress Your Banker

Your banker is used to juggling technical terms and mathematical formulas to assess your loan application. To not be seen as a novice, here are some expressions to know:

Technical Terms : The Jargon of Mortgage Credit Pros

Because mortgage credit in Morocco can be an impenetrable jungle, it's important to know the technical terms that could save the day. Here are some key notions to understand so you don't get lost in the twists and turns of credit offers:

Decreasing Amortization : Decreasing amortization is a bit like melting ice cream in summer: it gradually decreases! This credit repayment method involves reducing monthly payments over time. In the beginning, the installments are higher because a larger portion of the capital is repaid. Over time, the interest portion decreases, which allows for reduced monthly payments. This is an option to consider if you want to avoid being strapped for cash at the beginning of the month.

Constant Annuity : Constant annuity, the faithful companion of those who prefer stability! With this repayment method, you can say goodbye to variations in monthly payments and plan your budget without surprises. In practice, the principle is simple: you repay the same amount each month throughout the duration of your loan, which allows you to know exactly how much you will have to pay until the end. No more cold sweats approaching the due date, you can sleep soundly!

Partial Grace Period : The partial grace period is like a break in your credit repayment. During this period, you only repay the interest on the loan without touching the borrowed capital. In other words, you can breathe a little by only paying the borrowing fees, without worrying about repaying the capital. However, be sure to check the conditions of your loan contract, as there may be limits to the duration of the partial grace period and additional fees may apply.

Mathematical Formulas : Tough Equations

But that's not all! You can also impress your banker by talking about the following mathematical formulas:

Calculating the Total Cost of Credit : The calculation of the total cost of credit is the magic formula that lets you know how much your loan will really cost you. It takes into account all the fees related to the credit, including interest, application fees, insurance, and much more. Basically, it gives you the total price to pay to realize your project.

Global Effective Rate : It's a bit like the recipe for a good dish. We put all the necessary ingredients to get a precise idea of the total cost of your credit, including fees, commissions, and everything else. But you don't need to be a chef to understand this rate. Just see it as a measure that represents the real cost of your credit as an annual percentage.

Debt ratio : You may be looking for a loan to carry out a project, but it is important to keep in mind that you do not want to go into debt beyond your means. This is where the debt ratio comes into play! It measures the share of your credit charges (and those you have already taken out) in relation to your total income. The formula is simple: Debt rate = total credit charges (consumer, car, home, etc.) / total income x 100. But don't panic! Generally, a debt ratio of up to 40% is accepted. To predict your debt ratio, you can use our monthly payments simulator.

Conclusion :

And there you have it, you are now knowledgeable about the lexicon of real estate credit! Now you know that TEG has nothing to do with iced tea, and that bail is not an exotic pet.

Although it may seem tedious, it is important to understand all the terms of real estate credit in Morocco before you embark on purchasing your dream home. With this guide in your pocket, you will now be able to communicate with professionals in the sector with complete confidence and avoid pitfalls.