News section:
13.05.09: How interest rate reductions in Europe have affected French mortgages

Information about mortgages in France

How Much Can You Borrow ?

As a non-French resident, you are able to take out a mortgage in France (restrictions may apply for people living in some countries) if you are buying a property there and providing your mortgage application is acceptable (please apply for a decision in principle if you would like more information on whether your circumstances would be acceptable).

Generally, French lenders will lend between 80 - 90% of the purchase price for non-residents, although different lenders have different criteria. We can obtain up to 100% mortgages in some circumstances.

Some lenders on our panel will also lend on the estimated notary fees (notary fees in France can range between approximately 3 - 10% depending whether the property is new build and therefore benefits from reduced fees, or resale).

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 (some lenders will look at 33 - 35% of your net income) then your application should be successful. Due to the nature of the French banking system some flexibility is available in certain cases.

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.

For Those Who Are Self Employed:

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 often very different. Generally, two years of accounts and tax returns are required. Please contact us if you would like to find out more.

Information on the Interest Rates 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 3 Month, 6 Month or 12 Month Index. To find out more about the Euribor, please visit the official website: http://www.euribor.org

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).

We also have lenders on our panel which will let you keep the VAT rebate when it is refunded while others will ask you to use it as to make an early repayment to your mortgage.

Life Insurance:

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. For those wishing to put down a larger percentage of the property value, life insurance may not be required although this is rare. 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!

Lender Set Up Fees:

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.

French Bank Accounts:

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. We can assist in setting up a bank account for all of our customers free of charge.

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.