France A basic guide to French mortgages

Eligibility & criteria
French wine region All of the mortgages we source are in Euros and secured against French residential property. French mortgages are full status and therefore proof of income and outgoings will be required to submit an application to a lender.

The maximum loan to value available is 90% of the purchase price which can include estate agent’s fees but not Notaire’s fees.

French lenders assess eligibility on the applicant's capacity to repay the mortgage. As a guideline, your existing monthly outgoings as well as the monthly repayment on your new French mortgage should not exceed 33% of your gross monthly income. A percentage of any rental and investment income you receive can be considered. Mortgage, rent, personal loans and maintenance commitments are all considered as outgoings. To find out how much you can borrow, complete our quotation request form.

French lenders will not consider lending to UK companies but it is possible to create a French company expressly for the purchase of a property. This is called a Société Civile Immobilière or SCI. This type of purchase may be advantageous for groups buying together and can minimise French inheritance issues. Before making a decision in regards to purchasing in the name of an SCI we recommend you seek legal and tax advice. .

Types of mortgage
Mortgages can be obtained for the purchase of new or existing properties, Gites and properties on Leaseback schemes.

Renovation and construction loans are available, however estimates will be required at the time of application, and only accepted if they are from French registered builders. Once the mortgage has been approved, funds will be released by the lender directly to your builders following submission of invoices. In the case of construction loans, more detailed information on the project will be required, so please speak to one of our French Consultants.

You can raise capital on your French property. It is also possible to raise funds on your French property to redeem another mortgage you may have.

Remortgaging is available. However, this will incur costs both at the Notaire’s office and with the new lender. We recommend that you check with your existing lender if any penalties will be payable for cancelling your existing mortgage.

Mortgage products
A variety of products are available. Both interest-only and repayment mortgages can be arranged on a variable or fixed-rate basis, or a combination of both. Terms can be from 6 to 40 years, however loans must be repaid by the age of 80. Many of our products do not have any early redemption penalties. For an idea of the current rates available see our Best Buy Tables, or for a personalised quotation complete our quotation request form.

Documentation required by the lender
Under French law, lenders are required to have full documentation proving that the borrower can afford the mortgage repayments, and you will therefore be required to submit a number of supporting documents. Please see below for a summary of what will be required. A detailed list will be compiled based on your situation and sent to you with your personalised quotation.

You will need:

Proof of identity & residence
Proof of income & outgoings
Bank statements
Property details

Timeframe
An Agreement in Principle can be obtained from a lender once all of the necessary documentation has been submitted. This takes approximately five working days. However, for loan amounts in excess of €750,000 this may take longer.

We would recommend that you allow a minimum of eight weeks from application to the lender to completion.

Life assurance
Life assurance is mandatory with the majority of French lenders, and many require borrowers to use their chosen provider. In some instances, it may be possible to utilise an existing or new UK or French policy. Please contact a consultant for more details. If you do not want to take out French Life Cover please specify when applying for a quotation to ensure we quote you suitable products.

Buildings insurance
Buildings insurance must be in place for completion. Please ask your Consultant if you would like to be referred to a specialist overseas insurance provider.

Bank account
You will need to open a French bank account before completion, from which your mortgage repayments will be debited. Your Consultant can assist you with this at no additional cost if required.

Payment of your French mortgage
Please be aware that missing a mortgage payment in France may have serious consequences and we therefore strongly advise you arrange for monthly debits from a UK account. A number of foreign exchange providers offer a renewable 12 month regular payment plan. The exchange rate is fixed at the start of the plan, and the agreed amount will be debited from your UK account and sent to your French account each month. This service gives you peace of mind in the knowledge that your French mortgage repayments will be met automatically each month. Please ask one of our Consultants to recommend a provider if this is of interest.

Transferring funds to France
Whilst purchasing your French property it is also likely that you will need to transfer funds to France, to pay a reservation fee, a deposit on the property, or to cover additional purchase costs.

Making payments in a foreign currency will mean you are exposed to movements in exchange rates. This is likely to affect the final cost of the property you are buying, as will the exchange rate you receive when you make the transfer.
Through our carefully selected foreign exchange provider we are able to not only save money on the exchange rate you receive but reduce your exposure to exchange rate movement.

For further information on how these services can benefit you please talk to your consultant who will be able to answer any questions you may have.

Completion
Mortgage funds will be released by the lender to your Notaire for completion of the purchase. You do not have to be present at completion and can give Power of Attorney if necessary, your Notaire will be able to discuss this with you in more detail.

Costs of setting up a French mortgage

Bank’s arrangement fee – typically 1% of the loan amount up to a maximum of €2,000. Should the lender wish to carry out a valuation, this will be covered by the arrangement fee. This fee will be deducted by the lender from your French bank account following completion.

Notaire’s Fees – your Notaire should provide you with a breakdown of fees payable once a sales agreement has been signed. If you take out a French mortgage to purchase the property or at a later stage, a further cost will be passed on to you by your Notaire for registering the mortgage at the land registry.

Estate Agent's Fees - often included in the purchase price.

We charge a non-refundable application fee of £200.

We recommend that you obtain specialist legal & tax advice before purchasing in France.