A mortgage in France

APPLYING for a mortgage in France is not too difficult as long as you follow some simple advice, and have your paperwork prepared.

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.

For example mortgage instalments cannot exceed more than one third of your average monthly income, this can vary and some banks are more flexible than others.

However, there are other major differences between UK and French mortgages, so what are they?

Eleanor Roberts, of Chic Finance, is a specialist in providing mortgage advice to British people interested in moving to France.

She said: “There are two types of mortgage, either repayment or French style interest only, the actual mortgage products obviously vary from bank to bank.

“For example, some banks offer variable or floating rates with a fixed repayment and variable term, whereas others offer it with the monthly instalment changing regularly and a fixed term.

“Fixed rates in France are fixed for the entire duration and usually have early redemption penalties attached to them, unless you have been able to negotiate them or fall into a specific situation covered by French law.”

Many French people check with their bank in advance how much they can borrow before looking for a home, so they can be sure when they make an offer.

It is advisable to apply for your mortgage when you have signed or about to sign your preliminary contract, the Compromis de Vente.

And remember you are legally allowed to have a get out clause, or clause suspensive, in your Compromis for obtaining finance.

Applying for a mortgage does involve a large amount of paperwork but Eleanor has a checklist of documents you may need to provide:

1. A copy of your passport.
2. A copy of your birth certificate.
3. A copy of your marriage certificate or divorce papers, if applicable.
4. A copy of your three most recent months continuous personal bank statements showing regular income and everyday outgoings, both in France and abroad.
5. A reference letter from your foreign bank (if you are not currently resident in France).
6. A copy of any loan statements.
7. A copy of any annual mortgage statements.
8. A copy of your most recent credit card statement.
9. A copy of your three most recent months pay slips and P60.
10. A letter from your employer confirming professional status, length of service, annual gross salary and your bonuses.
11. The last two years company accounts, profit & loss and balance sheets if you are self employed.
12. Your last two most recent personal tax returns if you are self employed.
13. A letter from your accountant confirming your income for the last three years and the source of this income.
14. Confirmation of the rental income that you receive (rental agreement, rent receipt, letter from the management agency).
15. Confirmation of the future rental income that you receive (rental agreement, letter from the rental agency).
16. A copy of the Compromis de vente (once this has been signed).

You may well find that the banks require other information depending on your personal situation.

For commercial mortgages, the paperwork differs depending on the project – whether it is for a gîte complex or for a shop or a factory.

As a starting point, it is important to supply the current company accounts and the company tax return for the existing business.

This enables the banks to check the feasibility of the project.

The usual term for applying for a mortgage in France is 15 years and is usually limited to 70 or 80 per cent of the property’s value.

Also once you receive a conditional offer outlining the terms you have a ‘cooling off’ period of ten days, and you have 30 days to accept the offer, which is usually available for four months.

The bank’s fees, frais de dossier, are payable upon acceptance of the loan offer and before completion at the notaire’s office.

The actual amount depends on the mortgage amount and the work involved for the bank but it is usually no more than €1500 but often as low as €300.

French property mortgage services