Property loans in SCI: advantages and disadvantages

If you are planning toinvest in real estate in the medium or long term, you will be aware of the amount of money and investment involved. One way to make the job easier would be to do it together, and that's exactly what an SCI allows. So how do you apply for a property loan to finance your property investment?

The advantages of obtaining a property loan as an SCI

Why buy with an SCI rather than on your own, and by extension why get a mortgage with an SCI? To answer this, let's look at what an SCI is.

An SCI is a non-trading property company. To create one, you need to be at least two people, each of whom must contribute a share of capital, which can take the form of a property if you wish. 

An SCI is effectively used to make property purchases for several people, as a civil company and not as an individual. The experts at papernest add a clarification: an SCI cannot have a commercial purpose, which means that purchases of goods for resale cannot be made through an SCI. 

It should be noted, however, that this does not exclude rental investments in real estate projects in SCIs; on the contrary, this is very often what these companies are intended for.

What advantage does an SCI have in obtaining a property loan for its investment project? Officially, approaching a bank as an SCI is no different from doing so as an individual. 

However, if we recall that in order to obtain a property loan, one must prove one's solvency and therefore one's financial stability, it is understandable that applying for a loan as an SCI may help to convince a bank. Indeed, it is more reassuring for a bank if there are several people to repay the loan.

What property projects can be carried out with an SCI?

Depending on the nature of the project you intend to carry out with your SCI, it can be referred to under different terms. For example, you can call it a family SCI, a rental SCI, or a professional SCI. 

The different SCIs and their specific characteristics 

A family SCI, as you might guess, is made up of members of the same family. Here, according to papernest, the objective is generally to buy a property for the family's use. The advantage of making this purchase in an SCI is that it facilitates the transfer of the property afterwards.

The rental SCI is used for rental investment projects. What does it involve? Most often, it is a question of buying a property in order to be able to manage it, put it in condition (possibly carrying out works), and rent it out. 

Finally, there are professional SCIs. This is a strategy to avoid the seizure of business premises in case of debt. Purchasing these premises through an SCI is effectively a way of separating the property from the assets of the company itself. It is therefore a security measure.

While an SCI does indeed make it possible to carry out these various projects, it should be noted that it also has certain disadvantages, which may be more or less significant depending on your concerns. 

First of all we have the fact that setting up an SCI requires compliance with processes, deadlines, paperwork, and takes some time. So you have to be prepared to at least accept these official steps, which you do not have to follow if you do your project alone.

Secondly, a major disadvantage is that you, as a partner in a non-trading property company, have unlimited liability. This means that in the event of the non-trading company's debts, if necessary, you may have to repay the debt from your personal assets. This is a risk to be taken: consider it in relation to your project, its soundness, and the people with whom you are setting up the SCI.

Quels autres outils pour mener à bien votre investissement immobilier en 2022 ?

Whether you go through an SCI or not, there are some notable elements that can help you to complete your project effectively. In particular, we can go back to the question of obtaining the mortgage, which will most often be used to finance the purchase.

According to papernest, a home loan is granted for three kinds of major projects: property purchase, rental investment, and renovation work under certain conditions. To obtain one, you have to approach several different banks and negotiate interest rates and loan conditions with them.

In order to maximise your chances of getting a favourable, and even advantageous, response from the banks, there are certain tools you can rely on. First of all, it is possible to estimate your borrowing capacity or your monthly payments using an online estimation tool. This is a way of preparing for your approach beforehand.

You can also ask a real estate broker to provide you with his services. This expert in all things real estate, but especially in financing, will help you perfect your loan application in all its stages.

Indeed, you will first show him your project, which he will help you to put together. The loan application file must show both the nature of the project and your solvency, i.e. your ability to repay the loan. 

The broker enables you to present your case favourably to the banks, and above all he negotiates the terms of the loan with you. This is a significant help for an undertaking as important and complex as a property project.

Enfin, ne négligez pas non plus l’existence d’aides et subventions de la part du gouvernement et d’autres associations, notamment relatives aux travaux de rénovation. Pour plus d'informations à ce sujet, vous pouvez notamment vous informer sur les aides de l'ANAH.