Taking out a mortgage in France

As many clients do not have the luxury to purchase their property in cash (without taking out a mortgage), or simply do not want to, the other solution is taking a mortgage. It appears that many clients prefer to take out loans in their home country, whether this is a new loan or a remortgage on an existing property, but there is another option, which is to take a mortgage in France.

It goes without saying that we can offer you legal and financial advice, and will always refer our clients trust worth mortgage advisers, who specialise in this area. All of this is English speaking of course, and all documentation is in English.

You may ask yourself, why should I take out a mortgage in France and not in the UK for example, and here are some of the important arguments:

The Law SRU: Under French law, if the buyer has his mortgage application refused three times, he is legally able to pull out of the sale with no financial penalties. If the purchaser decides to take a loan outside of France, this condition no longer applies and so therefore, if he is refused credit from the bank, and has to pull out of the sale, penalties to the owner and the agency have to be paid.

Euro: it is interesting for the buyer to take a loan out in Euros, considering the high exchange rate between certainly the American dollar.

French banks are able to offer you a variety of loans to meet with your requirements. For example, a bridging loan is possible against a property in another country. If you are living and working already in France (and are classified as a French tax payer) you have the possibility to arrange a 100% mortgage on the property. If you are a UK or European (EU) resident, a 15% deposit is usually required and can be lent up to 85% of the mortgage amount.

If you are a non EU tax payer, mortgages can also be obtained, normally with a 20% deposit.

You do have to prove certain elements to the mortgage provider, such the confirmation that you have the means to pay back the borrowed amount. They often ask to see pay slips and bank statements. They will also ask you to take out a life insurance contract during the period of your loan.

In order to apply for a French mortgage, there are many papers needed, here are some examples:

  • Identification papers such as passport.
  • Proof of income either a salary by showing three month pay slips or pension papers.
  • For self employed people – most banks or lenders ask for two years trading accounts and tax returns.
  • Bank statements for the past three months.
  • Statements for the other mortgages or loans that you have.
  • If you are currently renting a property, certain banks may ask you to provide them with a copy of your rental contract.
  • For interest only mortgages, the bank will ask for an assets statement.

If you are requiring a mortgage for a new property or if you want your mortgage to cover renovation costs, you will be required to provide the following documents:

  • Professional quotes from French registered tradesmen.
  • For a new build development, you will need to builders compromis de vente for the land, his building permit, the contract for the building and the plans.
  • For an equity release, you will need to show the loans repayment timetable.

If your loan application is declined, then you will be given a paper by the institute for you to use as proof.

If your application is accepted, you will receive an offer from the bank or lender, and you then have a ten day cooling off period for you to consider your offer along with the terms and conditions.

Written by Alexandra Connolly, all rights reserved, August 2005 ©

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