Mortgages are available to residents in France, UK and Ireland. Buying a property in France whether to use for holidays, longer periods or to rent out whilst still residing in the UK is possible. Not all banks allow you to apply online but some allow for the mortgage application to be done online and several have English speaking staff.

Applying for a mortgage

In order to apply for a mortgage you need to be over 18 and hold no county court judgements. The banks will require a knowledge of your financial position and documents confirming your employment, general assets, project and bank details amongst other items. A copy of the ‘compromis de vente’ for the property you are purchasing will also be required.

Self-employed applicants will be asked for additional documentation such as bank statements concerning the company’s bank accounts, statements of accounts (i.e. profit and loss accounts) and SA302 tax calculation forms.

Once your mortgage application has been studied, if you’re successful, a ‘decision in principle’ (DIP) will be issued.

Choosing the right mortgage for you

There is a choice of mortgages – either fixed or variable rate. The duration may run from two – 25 years.

Fixed rate mortgages over a longer duration tend to be the popular choice in France compared with the UK where variable rate and interest only mortgages are often the first choice.

Redemption fees may be applied if you decide to pay it off before the end of its term. Generally the fees will be the equivalent to 3% of the capital reimbursed or 6 months’ worth of interest. The lower of the two amounts will be applied.

Variable rates can be capped at different levels and some mortgages, depending on the characteristics of your project, can have a 0% rate of interest. Eco loans are also available.

With some mortgages, increasing or decreasing your monthly payments or taking a break is possible (subject to terms and conditions).

Life insurance

Life insurance called ADE (Assurance Décès Emprunteur) is recommended when taking out a mortgage. In the event of death during the term of the policy, it covers the outstanding debt. There is no fixed cost for this type of policy as it depends entirely on individual circumstances.

The Mortgage offer

Once you have accepted your Decision in Principle offer, the official mortage offer will be issued and you then have a cooling off period. After this, if you want to go ahead, the offer should be signed and returned by post.

Once the paperwork is complete your Notaire is updated with the information.

The Notaire will later send a request for the mortgage to be released based on the date of the Compromis de Vente signing – the day you take ownership of your French property.

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The first step when buying a property in France is to calculate your budget. If you need to borrow funds for your French property purchase, then you should primarily make sure you are eligible to borrow funds in France. Be aware that any French mortgage must be secured against the property itself. It is possible to obtain an Agreement in Principle in France and this is a good weapon to have in your arsenal when bidding against a cash buyer because it gives estate agents confidence you have the finances in place. You also need to take into account fees for Notaires (for legal affairs) and estate agent fees which can make up a significant percentage of the purchase price. Sometimes estate agents fees are rolled up in the purchase price so it is worthwhile double checking this.

Once you have your budget, you can go to France to find your dream property.

When you find a property, you may sign a Compromis de Vente (a sales agreement) and transfer the deposit to secure the property. A signed copy of the sales agreement must be submitted to the lender if you are taking out a mortgage. It is important that you include a “Clause Suspensive” to protect your deposit in the event that you are not able to secure a mortgage.

The lender will then instruct a valuation if necessary.

You will then need to open a French bank account, and arrange buildings and life assurance. You must also decide whether you plan to attend completion at the Notaire’s office. If you are unable to attend, you will need to arrange a Power of Attorney so leave additional time to organise this.

If you are borrowing funds, the lender will issue a mortgage offer, sending a copy to you and your Notaire. Your mortgage offer cannot be returned to the lender until the end of an eleven day ‘cooling off’ period. If you return your offer early, it will be returned to you and the eleven day cooling off period will begin again.

Once you have returned your signed mortgage offer to the lender, the Notaire can request the funds. You will need to ensure you have transferred the balance to the Notaire.

You are then ready for completion and you will become the proud owner of your very own French property.

Essential French mortgage information

French banks do not have access to credit checks on international clients, as buyers in the UK would be used to. In order to assess a client’s affordability, the banks require documentation showing that your outgoings, including your proposed monthly mortgage payments, do not exceed 33% of your income. Existing outgoings would generally include any existing formal financial agreement, such as mortgage payments, loans, credit card payments and child maintenance.

Life assurance and building insurance will be required to have in order to borrow and this can take some time. We would recommend that you allow a minimum of two months from application to the lender to completion.

Mortgages are available on a repayment or interest only basis. The latter is subject to stricter lending criteria. Both types of mortgage can be arranged on a variable, fixed or capped basis. Depending on the lender, there will be a maximum age by which the loan must be repaid, which can be as high as 75.

Mortgages can be obtained for the purchase of new or existing properties, Gites and on Leaseback schemes. For leaseback properties the scheme will need to have approval from the bank and this is more likely to be granted for schemes run by the large reputable management companies, such as Pierre et Vacances, MGM and Odalys.

Renovation and construction loans are available, however estimates will be required at the time of application, and have to be from registered French builders. Once the mortgage has been approved, funds will be released by the lender directly to the builder following submission of invoices. In the case of construction loans, more detailed information on the project will be required.

You can raise capital on your French property. It can also be possible to raise funds on your French property to redeem another mortgage you may have.

Re-mortgaging is not a common thing in France and as a result can be very costly. You will need to pay costs both at the Notaire’s office and with the new lender. It is important that you get the correct mortgage product first time round and check if any penalties will be payable for cancelling the mortgage.

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When you are looking to purchase a property in France you may need to borrow funds to finance the deal. You can apply for a mortgage in your country of residence or you can go direct to a French bank and arrange a mortgage. Some French banks have English speaking services and documentation which, if your French is a little rusty or at the early stages can be very helpful.

Or you may want to consider using an independent broker, one who is knowledgeable on the ins and outs of French mortgages and who will be keeping up to date with the latest products and offers. As elsewhere, French mortgage providers will offer different types of mortgages, different rates and require different criteria from you as the borrowing party. A good broker should be aware of all the different variables, be able to consider the French market in its entirety, compare findings to what you are looking for and make suggestions for what suits you best.

Brokers should be aware of the best offers, the latest offers and discounted products from all the lenders. They should explain the terms of the loans to you in detail and help you to understand the impact on you should you want to redeem early, make extra payments etc.

French banks can offer you a mortgage agreement in principle which is always helpful to have before you set your heart on a house, make sure that if you want this to be taken care of, your broker is aware of it and requests that the bank can supply this in advance. This can be helpful if you want to negotiate the price, gives you peace of mind that there will be no nasty surprises when you least want them and means that you have made inroads to getting a French mortgage which can cut down the time it takes to dot all the “I’s” and cross the “t’s” – and there is a lot of that to be done when you apply for a French mortgage.

Your broker can also help you to choose a bank and open an account in France for making your Euro payments to your French banker. You do not have to have the bank account and lender at the same bank.

You may want your broker to help you all the way through, not just dealing with the mortgage lender, opening a bank account but also to talk to the Notaire on your behalf (Notaires are the only body authorised to handle conveyancing law in France). You should make this clear to the broker right at the outset – they are not all keen to do this especially if they have quoted a set fee for sorting out the mortgage and no more.

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Applying for a French mortgage is normally quite easy and painless.

The mortgage industry in France is highly regulated and if you are a foreigner buying in France there will be a lot of paperwork involved.

It will certainly go in your favour to organise as much as you can before you find the property of your dreams and need to get that all important transfer of funds arranged.

You should try to get an agreement in principle from your bank. You can pay for the services of a broker experienced in French mortgages to help you choose the right bank and the right mortgage for you.

French banks may appear at times to be difficult, often it’s a language barrier or the rules of banking in France are so different, if you speak no French at all it is definitely worth considering some help and use a translation service to get important documents translated.

Some French banks provide documentation in English, some don’t but one thing you can guarantee is that they will all want a lot of paperwork. Usually you can scan and send documents, sometimes documents will need to be posted or couriered to ensure safe and timely arrival.

Documents that will be required – although there may be more, according to which bank you use are:

Passport
Marriage certificate
Bank statements – last three months usually, sometimes more. You may also be asked for a letter of reference from your bank
Tax forms
Proof of deposit eg bank statement showing the funds
Last three months bank accounts;
Audited annual accounts (if self-employed)

Your estate agent in France may also be able to help you with the sales purchase; many of them speak English and are happy to assist (especially since their fee is typically 4-10% of the cost of the property).

There are different types of mortgage available in France, it is critical that you make sure you choose the right one for you, whether that is a straightforward repayment, interest only, combination or other.

A French mortgage will require you to have insurance and mortgage protection – this is mandatory for the life of the mortgage and the amount is generally added to your regular mortgage payments.

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Mortgages in France – the basics

When you’re buying a property in France, it may be worthwhile to consider taking out a French mortgage depending on your circumstances.

Here is the basic information for considering a French mortgage:

Banks: French banks can agree to a mortgage in principle before a purchase is agreed. Sorting this out early with the bank can give you peace of mind that when you need funds, the bank will make them available. We advise you to open a bank account as soon as you know you are going to want a French mortgage – you’ll get used to the requirement for paperwork and go through the main credit checks although if you borrow from a different bank you will certainly have to go through all the checks again.

Brokers: A broker with knowledge of French mortgages may be able to help you choose the right mortgage for you and help you with the application and paperwork. There will undoubtedly be a fee for this service – either direct or within the fees from the bank.

Deposit: Typically banks will want buyers to provide 20% of the cost price in the form of a deposit. There can be circumstances when they will require slightly less or more but as a general rule of thumb 20% seems to be the norm.

Euribor: The Euro Interbank Offered Rate (Euribor) is a daily reference rate based on the averaged interest rates at which Eurozone banks offer to lend unsecured funds to other banks in the euro wholesale money market. French mortgages will be linked to that rate.

Fixed Rate mortgages: You can get a mortgage which is fixed for the entire term of the mortgage. Often compared to non-French mortgages the rates can seem quite low. You’ll need to check the small print and penalties carefully. There are likely to be costs involved in making extra payments or redeeming the mortgage.

Immobilier: Estate agents in France are paid by the person buying not the person selling. Typically fees will be from 4-10%. This means if you are negotiating the cost you may need to negotiate with both the estate agent and the seller.

Interest Only Mortgages: Where you pay interest only on the amount borrowed and then pay a lump sum at the end. You can also get a combined interest only/repayment mortgage where the interest only element is paid for the first part and then the repayments follow, often at a greatly increased monthly payment as you “catch up”.

Insurance: In France it is essential to have property insurance before you complete the purchase transaction on your new home. It might sound odd that you are buying insurance on something that technically isn’t yours but that’s the way it is! Your broker may be able to help you with this. You should know that in France if you take out insurance through a French broker, you need to give written notice to end the insurance at least one month before the expiry date. You cannot just stop paying without notice – the insurer can have your name put on a black list for this and, they frequently do as foreigners are often caught out by this law.

Language: It is critical that you understand the terms of your mortgage. If the French bank does not supply translated documents it is important that you arrange to have this done and check for yourself. Your broker may speak perfect French and be happy to translate for you but in our experience it is best to get any translations directly from the bank of independently by a reliable and experienced financial document translator. Banks may use old fashioned, technical language and often appear to use contradictory phrases. The last thing you want is to find out half way through your mortgage that you’ve misunderstood terms and are stuck or will pay penalties you were unaware of.

Notaire: Under French law, notaires are the only professionals legally qualified to handle conveyancing. You may want your broker to liaise with the notaire – especially if the notaire does not speak French – make this clear to your broker from the outset.

Paperwork: Banks require a lot of paperwork from foreigners taking out a French mortgage – always take copies of everything.

Surveys: Property surveys in France are carried out by the French banks lending the money. It is not common for the lender to have a full survey carried out but it is possible. There are English speaking surveyors in France who can provide this service.

Term: A mortgage can be arranged for a maximum period of 30 years or until your 75th birthday whichever is the earliest.

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If you are looking for a mortgage for your French property purchase then you will need to either borrow against an existing asset in your home country (usually an existing property) or take out a mortgage on the French property – either in your home country or in France. Generally it is taken that you will borrow either in the currency of your income or the country of the property purchase.

There are many financial institutions offering loans in France but it is mainly the major French banks (BNP Paribas, Credit Lyonnais, CIC and Société Générale) that provide long term finance such as mortgages. Some international banks such as HSBC and Barclays offer international mortgages. There are also French “Mutual” Banks like Crédit Agricole and Crédit Mutuel, and also La Poste (Post Office in France) – all of whom may offer competitive rates.

Interest rates in France are historically lower than those of some other countries, notably the UK, although they are, of course, subject to fluctuation.

Mortgages can be obtained for up 80% of the property purchase price, more for new builds under certain circumstances such as the loan is not a significant percentage of your income (currently 35%) and you will need to be resident in France. There are fixed rate and variable rate mortgages, interest only and capital – there are lot of choices and it might be worth asking an agent with experience to investigate what the best mortgage rate is according to your needs (though you will have to pay for their advice).

If you take out a French mortgage and your income is in a non-French currency, you will need to open a French bank account to facilitate payments.

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