Q&A Ask the Experts - What happens if you go into negative equity?
15 Nov 2021
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Buying in France with a French mortgage rather than in cash comes with many added benefits and protections
Demystify the jargon and understand what types of French mortgage products, rates and terms are available
There are similarities, but the French mortgage process is unique to France. Get ahead by understanding what is involved.
Get to grips with the eligibility, affordability and other lending criteria of the French banks and pick up top tips for a successful application
Buying a property overseas can be a foreign experience, but learn how it works in France so you don’t get any unexpected surprises along the way
Looking to buy in the Alps or release equity from a property in the South of France? Looking for a buy-to-let or thinking of buying off-plan? Learn more here
We have prepared these French Mortgage guides to provide you with an idea of the process involved. This is what to expect if you are thinking about purchasing a dream home in France with a French mortgage.
All French Mortgages are in Euros and secured against French residential property. The maximum loan to value available, for non-French residents, is currently 85% of the purchase price. This can include estate agent’s (immobilier) fees but not Notaire’s fees. French Mortgages can be obtained for the purchase of new-build (VEFA) or existing properties, main homes, second or holiday homes or investment properties including Leaseback schemes.
A variety of French Mortgage products are available for your French property purchase. Interest-only and repayment mortgages can be arranged. These can be on a variable rate, capped or fixed-rate basis, or a combination of both. Terms can be from 5 to 25 years and fixed-rate mortgages permit you to fix the rate for the lifetime of the loan! Euro mortgages must be repaid by the age of 75 to 80. French mortgage rates are all based on the Euribor, the interbank lending rate set by the European Central Bank. The Euribor is currently negative, hence why French mortgage rates are at near-historic lows.
Typically, it takes around 3 months to purchase a house in France - that's from the point you have signed the pre-contract (compromis de vente, or CDV), to transferring the funds and receiving the keys, whether you purchase with cash or with a mortgage. Assuming you haven't already got an Approval in Principle, the time taken from submitting an application (with all the paperwork) to receiving the formal mortgage offer will take around 4- 6 weeks with IPF, but can take over 3 months if you go to a bank directly! If we have already obtained an AIP for you, the formal mortgage offer can be issued in a much shorter timeframe.
In short, no! The notaire takes around 2 months to carry out all the checks and diagnostiques on the property, and IPF can easily apply for and obtain a formal mortgage offer for you within that time. In fact, becuase of our processes and the comprehensive service we offer, 80% of our clients complete BEFORE the date set in their compromis!
They don't use income multiples in France. Instead, they use a debt-to-income ratio, whereby they want to see that you don't spend more than around a third of your monthly income paying off your contractual debts (so that's your mortgages, car finance, credit cards where you don't pay the full amount off each month, personal loans, child maintenance). Check out our Mortgage Application Guides for more information on the eligibility and affordability criteria used by the French banks, or plug your information into our French Mortgage Calculator.
Yes, French banks will lend to self-employed persons (and anyone who is a Director of a business with more than 25% of the shareholding will be classed as self-employed). You will need to have tax returns and company accounts dating back 3 years. Bear in mind that the French banks will look at the salary you have taken from your business, and may not take into account the dividends - so please get in contact with us so we can help you understand how to best present your situation to the French banks to avoid jeopardising any French mortgage application.
It's not an immediate 'no' but it will depend on a variety of other factors, such as the level of your income, whether the overdraft is authorised, or if you have savings elsewhere. It is undeniable however that the banks will look more favourably on those that don't use their overdraft and those that pay off their credit cards at the end of the month.
Not unless you want to borrow more than €2M - in which case we can work with the UK-based Private Banks. However, if you are looking for a loan size of less than that, the only option is to use a retail (high street) bank based in France. Which is what we do - so get in touch!
Firstly, be wary of the ultra-low rates you may see on the internet as they are a) likely to be only available to French residents, and b) if they are available to non-residents they will also require you to take out life insurance and also deposit a large sum of money with the lender. These can then make the rate more expensive than the slightly higher rates offered elsewhere, which don't come with 'strings' attached.
You can check out some of the more popular products in our French mortgage rates table, but we work with all the banks that will lend to non-residents so do get in touch so we can find you the product and rate most suitable to your circumstances
"I can’t recommend IPF services well enough. They literally guide you through the process from start to finish and are always available and helpful."
"This was the second time we have used IPF to finance our property. This experience matched the last, which was first class in every respect. The level of detail, insight and understanding we received was deeply impressive and we would recommend IPF to anyone seeking European finance. It is a truism that we would not have had a chance of achieving what we have done without Fiona and Ellie."