THE FRENCH MORTGAGE GUIDE
Information about mortgages in France
I don't live in France, can I get a French mortgage?
Yes! You don't have to live in France to qualify for a French mortgage although the property you are buying must be in France. It is even possible to arrange the mortgage, French bank account and completion on your French property purchase without having to travel to France. We arrange mortgages for customers from countries the World over, including the UK, Ireland, US, Australia, Russia, Belgium and United Arab Emirates to name a few.
I live in France, can you help me?
Yes! We can help expatriates that are already living and settled in France. Typically scenarios where we can be assistance if you're already in France are new purchases, re-mortgages, post mortgage finance and equity release.
What loan to values are available for French mortgages?
Most French banks will offer mortgages of up to 80% loan to value (or price, whichever is the lower), however we do have some mortgage lenders that will 85% and 90% as well. In some rarer cases 100% mortgages are available but entry level criteria and restrictions apply. The lower the loan to value the better chance your mortgage application will be accepted and you will be able to access more mortgage products.
How can I find out how much I can borrow?
The most reliable way to find out how much you can borrow would be to complete a Free decision in principle request or give us a call and have one of our expert advisors consider your individual case. Every person's situation is different and mortgages are not one size fits all. Our personalized approach to French mortgages will ensure that the advise you are given is adapted to your specific situation each time.
Due to French consumer law, lenders have to assess how affordable it is for you to take on a French mortgage. To do this, they will take into account any existing loans, mortgages, outstanding credit card balances which are not paid off in full at the end of each month, child maintenance, rents etc. that you may have as fixed outgoings. They will compare this with your income and providing that your outgoings (including the new mortgage for which you are applying) do not surpass 33 - 35% of your gross income after national insurance (or social security) contributions) then your application should be successful. Due to the nature of the French banking system some flexibility is available in certain cases.
There are many exceptions to these rules, the only way to be able to know for sure is by contacting us and having one of our experienced advisors look at your financial situation. Some of our lenders will go up to 50% debt to income ratio or 5x annual income.
Each lender will assess an application in a different manner depending on in-house policies so it is therefore impossible to predict 100% the outcome of any mortgage application, although our lengthy experience in this domain does help in assessing potential borrowers and advising which lenders would be susceptible to agree to your mortgage. If you would like to find out more, please complete our Decision in Principle form.
I'm self employed, will I qualify?
We are often asked whether those who are self employed or company directors can obtain a French Mortgage. The answer is often yes, but it is impossible to speculate as each case is very different. Generally, three years of accounts and tax returns are required. Please contact us if you would like to find out more.
What interest rates are used in France?
French mortgages are based on the Euribor index (EURIBOR stands for Euro Inter Bank Offered Rate) and are either based on the Euribor 1 Month, 3 Month, 6 Month or 12 Month Index. To find out more about the Euribor, please visit the official website: http://www.euribor.org
What types of mortgages exist in France?
There are plenty of different mortgages in France including fixed rate, tracker rate and capped rate mortgages. Take a look at our French Mortgage product page for more details.
I want to pay off my mortgage early. Will I have early redemption penalties?
This is an important question to ask and each mortgage will have a different answer. Typically if you have early redemption penalties in France they will be six months interest on the capital to be reimbursed, limited to 3% of the outstanding capital. In most cases it is possible to obtain a French mortgage where you have no early redemption penalties.
Can I increase my monthly payments or make lump sum over payments?
With a suitable mortgage yes you can. We can assist you in ensuring that this option is available to you.
Do payment holidays exist with French Mortgages?
Yes! Again it depends on the exact mortgage that you are taking but French mortgages with the possibility to take payment holidays do exist. Our mortgage advisors will help establish what you require in terms of flexibility and will be able to propose suitable mortgages offering this option.
Can I get a French mortgage for Buy to Let and Leaseback Properties?
Lots of people are currently purchasing buy to let and leaseback property in France as these are attractive investment alternatives to buy to let property in their home countries.
Some of our panel of carefully selected lenders will take into account a % of your future rental income from leaseback or buy to let property. In the case of buy to let property you will need to sign a management contract with a lettings agency for this to be taken into account.
For leaseback property, we are often asked if our panel of lenders will provide a mortgage on the VAT exclusive purchase price or the VAT inclusive purchase price. The answer to this question is that it depends. We have lenders that will lend on both the ex VAT (called HT in French) and the inc VAT (TTC) prices depending on whether or not the developer is advancing the VAT. (Only a small percentage of developers advance the 19.6% VAT rebate associated with new build leaseback property).
The French property I want to purchase requires renovation work. Can I get a mortgage for this too?
It is possible to finance the renovation works as well as the property purchase with a French mortgage. You will be required to provide quotes from a registered tradesman at the time of the mortgage application; we can assist in liaising with your agent in order to obtain these. Once the mortgage granted and the property is owned by you, the bank will then release the funds for each stage of the work as it is completed. Your French Mortgage Direct mortgage advisor will assist you with each staged payment and help establish a schedule.
Do I have to take French life insurance cover?
It is mandatory to take life insurance in France to cover the mortgage. The standard process is that this is arranged at the time of the mortgage and most lenders will only accept an application if this is the case although recent regulations mean that lenders are supposed to accept life insurance cover from other insurers so long as it is equal to the cover they offer. This is a grey area with some banks for non-resident customers and they still insist that you take their insurance. We can negotiate this on your behalf and help you obtain the best life insurance deal available.
For some of the 70% LTV mortgages we can arrange there is no requirement to have French life insurance cover, it is completely optional.
Some of our French lenders accept that you assign an existing policy or allow you to shop around to get the best insurance for you. We can assist you with regards to this - it could be a considerable saving!
How much do French banks charge to arrange a mortgage?
The French Mortgage market is a lot less competitive between lenders than the UK market, and most lenders only have a handful of products on offer compared to UK lenders who may have a dozen or so at least!
All French lenders will charge a set up fee (often called Frais de Dossier) which can either be fixed, or a percentage of the loan taken out.
Any quotes we provide will include information relating to the set up fee although it is important to understand that these may change as they are dictated by the lender.
Will I need a French bank account?
Yes! If you take out a mortgage in France you will need a French bank account for your direct debit payments. It is advisable to set one up at the same time as you make your mortgage application and we will assist you with this.
How Long Does an Application Take?
If you are applying for a French mortgage you will be required to provide numerous documents such as your last 3 months bank statement, savings accounts statements, mortgage statements etc (we will provide you with a comprehensive list of documents required when you select a mortgage).
Providing that the application you file is complete and no documents are missing, a mortgage offer can usually be issued within 2 - 6 weeks. We can usually fast track urgent applications providing the application is complete.
Info kindly provided by Morgages direct