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 or in the French Overseas Departments. With most French banks and mortgage lenders, everything can be arranged for the French mortgage and bank account allowing you to complete 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 (Europe in general), US, Australia, Russia, Asia and United Arab Emirates.
I don't need a big mortgage, just 40 000 Euros, can you help?
Yes! Whilst some banks have a minimum mortgage amount of 50 000, 75 000 or even 100 000 Euros, we work with lenders that are willing to lend small French mortgages. The minimum mortgage amount is 21 500 Euros.
I have links to the United States, can I still get a mortgage?
Yes, we can. With the regulations that the US impose on foreign banks, some banks have decided to no longer lend or open bank accounts for US persons or people that have links to the US in some way. We do have banks and lenders that WILL lend to US persons so please contact us so that we can explore possibilities for you.
I live in France, can you help me?
Yes! As French Mortgage Brokers based in France, we regularly help French residents (either of French nationality or 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.
Should I use a French Mortgage or release equity on my existing mortgage?
Currently equity release mortgage products are unavailable in France.
What loan to values are available for French mortgages?
Mortgages of up to 85% of the property price or value (whichever is the lower) are available to non resident borrowers and up to 100% of the price to French residents (to be considered a French resident you must already be a resident in France and income source in France). Borrowers able to put down at least 20% of the property price and fees will have the greatest selection of French mortgages available to them.
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 English speaking French mortgage 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. Three years of business accounts and personal 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?
France has a more conservative approach to mortgage lending and as such the mortgages available are straightforward. The majority of mortgages are capital repayment mortgages with either fixed, tracker and capped rate interest rates. Interest only mortgages are also available in France but not as easily obtained in other countries. There are strict asset based eligibility criteria. Take a look at our French Mortgage product page for more on details.
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 French mortgage 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 20% VAT rebate associated with new build leaseback property).
Can I get a French Mortgage to buy a Gîte or Chambre d'Hôte?
French mortgages are only available for residential properties. As such mortgages are not available for gîtes, chambre d'hôtes, farms, vineyards, hotels etc. If there is a gîte as part of the property it is sometimes possible to still obtain mortgage finance but only if this is a secondary activity and a small part of the property. If your intention is to come over to France to run the property as a gîte and obtain your sole income from this then it wouldn't be possible.
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.
How long does it take to obtain a French mortgage?
The answer to this question really depends on the time of year and the bank who you apply, but it varies between 4 to 8 weeks on average. We strongly recommend that as a non resident purchaser, you allow a minimum of 60 days from signing the Compromis de vente to obtain mortgage finance. If your agent or notary suggests a shorter time you should really request that it is extended to meet this.
When applying, 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).
By submitting a complete mortgage file you will essentially save yourself time as first us, the broker, will be able to review and prepare the application for the bank a lot quicker and with minimum requests to yourself, which means the bank in turn can also treat the application quicker as well. An incomplete application will attract a lot of to-ing and fro-ing with requests for additional documents and this will cause delays.
We can usually fast track urgent applications providing the application is complete.
Do I have to take French life insurance cover?
It is mandatory to take life insurance in France to cover the mortgage although there are some exceptional cases when the loan to value is lower that the bank will waiver the requirement to have insurance. The standard process is that the life insurance cover is arranged at the time of the mortgage and most lenders will only accept an application if this is the case.
French insurance law requires that lenders 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. Additionally, borrowers can now change their life insurance policy in the year after they take out their mortgage so this allows them to swap to a cheaper, equivalent policy.
Some of our French lenders accept that you take out a foreign policy or different French policy enabling 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?
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. This is usually 1% of the loan amount, usually with a minimum amount and frequently with a cap.
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.
Does French Mortgage Direct charge a fee?
Yes, we charge a small fee which is payable when you complete on the property and mortgage deed at the notary; this is in accordance with French law as it is illegal for brokers to charge an upfront fee. Our fee is always clearly detailed in the mortgage quotes and is minimal for the service and savings working with us provides. No mortgage = no fee.
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.
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 a fixed rate mortgage you can expect to pay early redemption penalties: six months interest on the capital outstanding limited to 3% of the outstanding capital. Sometimes these can be removed by prior arrangement with the bank or the fees can be reduced. If you are on a capped rate or tracker mortgage there are unlikely to be early redemption penalties but you must check.
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.
Where is French Mortgage Direct registered?
French Mortgage Direct is a trading name of LOVE FINANCE, a French registered company registered in Vienne with the number 790 548 788 based between Lyon and the French Alps. We cover all of France for mortgages and are registered as a category 1 Mortgage Broker with the ORIAS (www.orias.fr) under the number 13003937 meaning we are completely independent and able to act as a mortgage broker (as opposed to being an introducer).