Buying Residential Property in France: French Mortgages. 10 things you need to know.

Securing Finance for a property acquisition in France is one such area where the process and products may be different. (Vineyard financing is viewed as a commercial loan and will be treated differently to residential loans but please contact us for more information on this subject).

• Mortgage options. You have essentially two different options when deciding on a French property mortgage. The choice is whether to go to a local Bank or to use a Mortgage broker. This may come down to something as simple as your fluency in French in which case you will be able to approach the local banks directly. Brokers are likely to have a broad range of products available from a selection of Banks and should be aware of which Banks have an active lending profile at any given time.
• Type of Mortgage. It is important to establish what type of mortgage you require. Although the range of products in France is expanding it may not have the breadth of products you are familiar with in other markets.
• Size of loan. The Banks willingness to lend will be influenced by several factors but you should be aware that the mortgage market in France is highly regulated and although Banks may be prepared to lend higher loan to value (LTV) ratios than other markets the affordability criteria are very strict and income needs to be certified.
• Mortgage Fees. It is normal for banks and brokers to charge arrangement fees and of course early repayment penalties are also normal. It is important to read the fine print. You should also be aware that the Notaire will incur a cost for registering the mortgage against the property which they will pass to you.
• Interest Rates. It is possible to choose between fixed and floating rates and although it is traditional in France for most mortgages to be fixed Capital plus interest repayment, interest rate only products are available. It is also possible to get buy to let (BTL) financing and leasehold financing against property.
• Pre-Approval. If you require financing for your property purchase it is always advisable to seek pre approval in order to be able to move quickly. If you however sign the Compromis de Vente and need financing to complete the transaction you must ensure that the financing is noted as a Condition Suspensive in the documentation.
• French Bank Account. It is essential that you establish a French Bank account as early as possible as you will need evidence of an account against which Mortgage repayments and utility bills can be presented.
• Life Assurance. We understand that there is no legal obligation but it is a requirement with most banks. • Process. It is important to allow time for this process. It can take between 4 and 6 weeks to get approval so it is advisable to prepare in advance.
• Taxation matters. We always advise investors to take professional tax advice on the implications of buying property in France as each investor’s position is different. However Mortgages can be used to offset potential liability to the French Wealth Tax threshold.