NOT everyone is able to purchase a property in France outright; many will have to apply for a mortgage.
Mortgages or home loans (hypothèque) are available from all major French banks with Crédit Agricole the largest lender.
Borrowing in France is regulated and the financial establishments have to abide by certain rulings.
The Crédit Agricole bank in the Charente and Perigord region offers a few pages in English for customers.
And there is one providing questions and answers on a French mortgage and starts by asking, how much can you borrow?
Up to a maximum of 80% of your French property investment, providing your total monthly loan repayments (including the new French property mortgage) do not exceed a third of your net monthly income.
What types of mortgage exist in France?
Mortgages in France are on a capital and interest repayment basis.
Over how long can one take out a French property mortgage?
Up to a maximum term of 20 years.
What choice of interest rates exists in France?
Firstly, one can benefit from a fixed interest rate over the full term of the loan, or the bank also offers variable interest rates and capped variable rates (index = EURIBOR 3 months).
Do I need to come to France to apply for a mortgage?
The full mortgage procedure with the bank can be dealt with by our postal service. If the property is required as security for the mortgage, you will need to sign this final act with your Notaire.
How long does it take to set up a French property mortgage?
From the time the bank receives the application with accompanying documentation, you need to allow approximatively 4 to 6 weeks before the funds can be released. When purchasing a property, the mortgage application is made as soon as one has signed a compromis de vente. An in principle decision can be provided within a 10 day delay from receipt of the full application.
Is the French property purchase procedure complicated?
It is always best to seek legal advice if one is not used to the procedures in an overseas country. In France, you will normally sign two contracts, firstly the compromis de vente (in which one can include suspensive conditions, i.e. if the purchase is subject to obtaining finance) and then the acte de vente at the final signature. The French property procedure is well structured for all parties and is not over complicated.
What extra costs are involved?
If obtaining a mortgage, there will be an arrangement fee payable to the bank and you will also have to pay the ‘frais d’hypotheque’ to the Notaire for the taking of the security over the property.
How do I make my French property mortgage repayments?
The monthly loan repayments are debited from your French bank account with Crédit Agricole Charente Périgord.
How can I transfer funds to France?
There are various methods of crediting funds to your French bank account such as bank to bank transfers, sending bank drafts, cheques or eurocheques, paying in cash or travellers cheques. The costs to be incurred and the exchange rate need to be considered carefully when deciding which is the best option
Naturally different banks are likely to have slightly different rules and regulations about applying for a mortgage, but the broad principles are the same.