17 February 2016 - French Mortgage News | International Mortgage News | Partners News |
How can I improve my chances of securing a French Mortgage?
As anyone who has secured a mortgage across the Channel can attest to, financing a property purchase in France with one of the French lenders can prove a challenging process. Here we will focus on three ways to improve your chances of securing a mortgage in France.
This struggle is no more clearly illustrated than in initially qualifying for the loan. Firstly, applicants must provide the bank with a veritable mountain of paperwork – everything from passport photos to pension statements; P60s to P45s. It is here where the advantage of using a French mortgage broker shines through. In applying through a good intermediary, your French mortgage broker will thoroughly assess your financial situation before supplying you with a tailored list of the supporting documentation required to accompany your application. Invariably, this goes a long way in easing the burden of tracking down and collating large volumes of paperwork.
Once your paperwork is in order and you are in a position to submit your French mortgage application to the bank (whether through a broker or approaching the lender directly), there are two hurdles you must clear to qualify for the loan. Firstly, you need a sufficiently low ‘debt-to-income-ratio’. This is a relatively simple mathematical equation – the underwriters will look at all contractual outgoings (including the future French mortgage repayments), and divide that figure by the total monthly income generated from all sources. As standard, the French banks will not want to see contractual outgoings exceeding around a third of income generated on a monthly basis. Make sure you keep your financial affairs in good order – a good French mortgage broker will be able to outline what the French banks are looking for.
The second hurdle that must be cleared in qualifying for the loan is demonstrating a sufficient level of savings to afford your French property purchase. On top of the deposit, you must cover the notary fees and purchase costs (usually around five to ten percent of the property price), as well as showing a certain level of residual funds – to prove that your savings have not been overly drained by your project. It is utterly crucial that you show the bank a strong capacity to save, no matter how low your outgoings, or how high your income.
One of the chief concerns for anyone embarking on the French mortgage process is the knowledge that a failed application could hamper one’s chances of securing finance in the future. This brings us to the next principle role of a French mortgage broker – the pre-underwriting of the French mortgage application. Upon receipt of your supporting documentation, your broker will review all of your documentation, pre-empt all the bank’s queries and present everything in a clear and logical manner.
Bear in mind that the lender is not only approving you for the French mortgage, but your chosen property. As a rule, French retail lenders will not finance properties or land linked to commercial activity – such as fishing lakes, hotels, or campsites. Furthermore, following the economic challenges over recent years, French banks are more cautious about funding old or dilapidated buildings, or properties in highly rural areas. Choose your prospective property wisely, therefore, before considering putting down an offer as this will impact the French mortgage options open to you.
To summarise, there is no doubt that qualifying for a French mortgage can be a rather tricky process. But through careful saving and careful spending, your dreams of a snow-topped chalet, a riverside Gite, or a Parisian penthouse could fast become a reality.
Please get in touch to discuss your French mortgage options on +44 (0) 207 484 4600, or to receive a French mortgage quote click here.