All French mortgages are in Euros and secured against French property
They are full status and proof of income and outgoings will be required to submit an application.
The maximum loan to value for non French residents is currently 85% of the purchase price. This can include the agents fees which are sometimes payable on top of the agreed purchase price by agreement but not the Notaires fees which can be about 6% with taxes.
French lenders assess eligibility on the applicants capacity to repay the French mortgage. As a guideline your existing monthly outgoings as wel as the monthly repayment on your french mortgage should not be more than 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.
French mortgage lenders will not consider buy to let mortgages or lending to UK companies. It is possible to create a French company expressly for the purchase of the property. This is called a Societe Civile Immobiliere or SCI. It is often used where a group of people buying together and can minimise French inheritance tax issues.
French mortgages are available for the following situations:
» Purchase of new or existing properties
Interest only and repayment mortgages are available. They can be on varied or fixed rate terms or a combination of both. Terms for a repayment mortgage can be from 6 to 40 years and the loans must be repaid by the age of 80. Many products don’t have an early redemption penalty.
Interest only loans are normally up to 75% with a max term of 14 years for a pure interest only mortgage with a min of 100,000 euros or 25 years for a hybrid product and 80%.
To qualify for a french interest only mortgage you need to show the french lender you have sufficient assets to repay the capital sum ( savings, liquid investments, property equity, although only 50% of your main residence) equal to 150% of the loan amount.
» Gites and properties on leaseback schemes
Renovation and construction loans but estimates need to be from French Registered builders and the funds usually go direct to the builders following submission of their invoices.
Refinancing of an existing French property ( this is unusual and expensive it is normal to stick with one lender for the duration of the loan. The set up costs are around 3-5% of the loan amount as apposed to 1% and the percentage drops to 75%. You cannot refinance at all from an interest only product to another interest only product?
» Buy to let mortgages where the income from the property being purchased is taken into account do not exist in France
- How much are you eligible to borrow?
- What are the products available ?
( Rates currently start from 2.3% for the hybrid interest only mortgage but you also have to factor in the costs of life assurance)
- What documentation is required to submit when making a formal application?
( eg Proof of identity & residence, Proof of income and outgoings, bank statements, Property details)
- Life Assurance for a French mortgage is mandatory with most French lenders.
- Buildings insurance is mandatory.
- French Bank account is normally mandatory.
What are the costs of arranging a French mortgage?
Typically 1% of the loan amount up to a max of 2,000 Euros. If the lender wants to carry out a valuation this will be covered by the arrangement fee.