French Mortgage FAQ
Why should I work with France Home Finance?
Is there a fee for the service?
I have the cash to buy my French property, why should I use a French mortgage?
What types of French mortgages do you offer?
How much can I borrow in France?
What is needed to qualify for a French mortgage?
Can you get a self-certification mortgage in France?
How long does it take to get a French mortgage?
What documents do you need to apply for a French mortgage?
What is the application process for a French mortgage?
What kind of property can I obtain financing for in France?
Can I finance renovations to my French property?
Is there an age limit to obtain a French mortgage?
How do I pay for my French mortgage?
Do I need a French bank account?
Does equity release exist in France? What can I use the equity for?
Why should I work with France Home Finance?
We understand that when looking for your French mortgage, you want the best deal on the market and expert advice to know which questions to be asking, ensure you understand the French paperwork and avoid costly mistakes.
We constantly monitor the French mortgage market and our well cultivated network to be able to offer you the best deals, transparently presented, up to the minute, everyday.
Most of our business comes from previous client recommendations. Please read our client reviews to see what they have to say about our service and results.
Is there a fee for the service?
As an independent mortgage broker, we do charge a fee for our service. This is always quoted to you upfront and with full transparency. Our fee is success based and only due when we obtain the mortgage you desire and you accept it. Some brokers say they have no fees, but you can imagine they do not work without compensation. These brokers can make their living by channeling all their clients through a small number of banks to obtain a higher compensation to make up for the lack of fee. They are also motivated to work very quickly with a large volume of clients and therefore often do not have time to provide adequate customer service.
You can also deal directly with a French bank that has English speaking staff to avoid a broker fee. The reality is that the banker will only offer you their bank’s products and rates (whether or not they are optimal for your project) and they will do nothing more than the basic task of obtaining a mortgage. Do not expect detailed explanations, anticipation of problems or proactive coordination with the other parties in the transaction. They are good people, however often understaffed and overworked. Further, French bankers typically have nine weeks of vacation so may not be available when you need them most. We are often contacted by desperate clients a few weeks before they need their mortgage funds who had been assured that there was no problem to get a mortgage, only to be let down at the eleventh hour.
We assure you that the broker fee paid to us will be more than covered by optimizing the global cost of your mortgage, ensuring you obtain the mortgage that best fits your investment objectives and quality advice to be sure deadlines are met and costly mistakes are avoided.
I have the cash to buy my French property, why should I use a French mortgage?
Many of our clients have sufficient savings to buy their French property in cash however it may not always be the best financial strategy. Here are five reasons why using a French mortgage might be preferable to paying cash:
1. Save money on currency exchange
The euro vs. your home currency exchange rate can swing up and down over time. When purchasing French property in foreign currency, you can easily pay a large premium due to the exchange rate if the exchange rate is not favorable at that moment. By taking a mortgage in euros, you postpone the need to move the full value of your purchase into euros. Then, when the exchange rate improves, you can pay off your French mortgage early if you choose.
Next, if you borrow in your home country to finance your French purchase, you could also be facing an unfavourable exchange rate at the moment you need to and repay the loan in your home country. Borrowing in euros protects against this.
2. Save money by reducing your taxable French rental income
Any rental income earned from your French property will have to be declared annually to the French tax authorities. You can reduce the amount of rental revenue declared by the interest paid on your French mortgage. This does not apply to mortgages taken in your home country for your French property.
3. Save money with lower French interest rates
If you’re considering a U.K. or U.S. home equity loan to finance a French property purchase, keep in mind that French interest rates have historically been percentage points lower. Your overall return on investment will likely be higher by opting for a French mortgage and retaining the rest of your capital in local investments.
4. Increase your budget to buy with a French mortgage
If you plan to buy in cash but are not happy with the size, location or style of property to which your budget corresponds, don't make a compromise that you might regret. A French mortgage will help you increase your purchasing power and budget to make an offer on the property that’s really right for you.
5. Reduce or eliminate your French “wealth tax” burden
You are legally obliged to declare the market value of your French assets to the government each year even if you are not a French resident. The wealth tax works on a sliding scale of 0.50 to 1.50% on the net value of your assets in France including property, cash, investments and valuables. You have an automatic credit for the first 800,000€ in asset value (net of debt outstanding). If you find yourself with more than this amount in assets, you can reduce the market value of any property you own by the capital outstanding on your French mortgage.
What types of French mortgages do you offer?
France Home Finance can assist you with classic French mortgages for new or existing French property and refinance mortgages to optimise your interest rate.
Most French banks only offer fixed rate repayment mortgages where the rate is fixed for the entire duration. Other products include interest only mortgages and combination interest only and repayment schemes. Some banks offer variable rate mortgages with EURIBOR tracker rates.
How much can I borrow in France?
French banks lend on average 70 to 80% of the total of the appraised value of your home (not always equal to the purchase price), agency fees and renovation costs. Most French banks do not finance the legal fees for the purchase transaction for non residents.
If you are a tax resident outside of Europe, North America and Australia, buying an atypical home or a home far away from major cities, you may be required to pay a larger down payment.
We can obtain financing for both salaried and self-employed individuals however self certified revenue for mortgage applications is not yet accepted by French banks. As a guideline, your new mortgage payment plus other monthly credit payments should not exceed one third of your gross monthly income. If you are married, your spouse’s loan payments and revenues are taken into account.
What is needed to qualify for a French mortgage?
Lending decision criteria are different in France than in many other countries. There are three key calculations French banks use to determine eligibility to borrow, all of which must be backed up with documentation to justify the revenues, debts and assets declared.
1. 33% Debt to Revenue Ratio:
Your new mortgage payment plus existing monthly debt payments (mortgages, rent for residence, car loans, personal loans, alimony or maintenance but not credit cards) should not exceed one third of your gross monthly income plus new rental income for all borrowers. The banks only count 70 to 80% of rental income for the calculation. If you are self employed, the bank will calculate this income by taking your percent ownership of net profits (average net profits over 3 years whether or not taken as dividends) plus your last annual salary. Banks look for at least 3 profitable years in business. These are broad rules as the details of how to calcuate and which incomes and liabilities to count differ with each bank.
2. Net Assets:
French banks will look at the value of your assets net of debt including real estate, savings plans, life insurance, stocks or other investments. This is very important to demonstrate your financial stability. They also need to see documentation to prove where your down payment and closing costs will come from.
3. Disposable Income:
The banks will also calculate your disposable income (money left to spend each month after all debts are serviced) as an indication of your financial stability. The more people in your household, the more disposable income required.
Can you get a self-certification mortgage in France?
Unfortunately French banks do not accept self-certification mortgages.
How long does it take to get a French mortgage?
Some websites will promise offers within a very short period of time however the reality in France is that the time to process your mortgage and issue an offer depends on your project, the current workload of the chosen bank and whether or not we are in a vacation period in France. French bankers have nine weeks of holidays! The main vacation periods are May, July, August and mid-December to mid-January.
From the date we receive your complete mortgage application, we can usually get a position on your file from the bank within the week. Issuing the offer can take two to six weeks. Delays can arise from additional information requested by the bank's risk committee or medical exams sometimes required for the French life insurance. Although the process and timing can vary, France Home Finance will keep you updated every step along the way so you always know what the next step is and where you stand in terms of deadlines.
What documents do you need to apply for a French mortgage?
The final list will depend on your personal situation and your project however here are the documents usually requested:
Identification:
passports, marriage certificate, utility bill, council tax bill
Revenues:
payslips, employment offer, pension income, P60s or W2s, leases for rental income, company accounts & accountant letter for self-employed
Debts:
mortgage statements, car and personal loan statements, credit card statements
Assets:
property valuations, stock portfolio statements, savings accounts, other investments
Taxes:
inland revenue declarations, 1040s, notices of assessment
Bank Statements:
the last 90 days account movements for all bank accounts
Property:
purchase contracts or property title
What is the application process for a French mortgage?
1. Complete pre-approval form
2. Decision in principle
3. Receipt of your complete French mortgage application and supporting documents
4. Confirmation of French mortgage product
5. Package and translate your application and send to mortgage bank, additional documents may be requested upon study of your file
6. Supporting documents for the chosen bank are emailed to you to complete and return (bank specific forms, life insurance, etc.)
7. Forms to open your French bank account are emailed to you
8. Decision from the mortgage bank’s risk engagement committee, mortgage offer printed and posted
9. Mortgage offer accepted and sent back (no earlier than 11 days after the receipt date per the French "cooling off period" law)
10. Upon receipt of accepted offer, the French mortgage bank notifies the French notaire that mortgage funds are ready to be relased to complete the purchase act
What kind of property can I obtain financing for in France?
You can obtain financing for almost any kind of residential property located on mainland France, including new constructions and rental investments, free standing homes and apartments. Restrictions may apply in the case of chateaux or properties needing extensive renovation to become habitable. Your French property can be for personal or investment purposes. France Home Finance does not offer French mortgages for purely commercial properties, such as vineyards, gites or hotels.
Can I finance renovations to my French property?
It is possible to include renovation expenses in the French mortgage for your new property although it can be easier to finance them yourself if possible. As the mortgage bank will be lending a higher amount based on the assumption that the renovations will increase the value of the property, the bank will require estimates from licensed and insured French contractors so they can be sure the renovations will be done according to French building code. The mortgage bank will disperse the funds to the contractors directly upon presentation of invoices which needs to be well managed in order to avoid delays. It is not possible to obtain funds to pay foreign workers for renovations with a standard French mortgage however it may be possible with a French equity release or cash out mortgage depending on the bank.
Is there an age limit to obtain a French mortgage?
You must normally be between 18 and 64 years old at time you apply for your French mortgage to qualify to apply for the obligatory French life insurance for your mortgage. Ideally your mortgage must end before your 75th birthday as the life insurance can become expensive after this date.
It may be possible to obtain a mortgage without French life insurance if you are willing to let the bank manage a sufficient amount of investments for you (stocks, bonds, funds) and sign over those investments to the bank to pay off your mortgage if needed in the event of your death.
How do I pay for my French mortgage?
You will be required to open a French bank account from which your French mortgage and life insurance payments will be debited and take a debit card. French banks don't issue credit cards. French bank accounts do have a cost which varies depending on the withdrawal limits and insurance on the debit card chosen, usually from 15 to 25 euros per month.
Do note that the one time French bank filing fee and montly life insurance are usually debited from your account with the first mortgage payment however some banks debit them upon acceptance of the mortgage offer.
Do I need a French bank account?
A French bank account is required as most French banks are not able to debit a foreign bank account, even if it is in euros. Many French banks offer a package including a basic Visa debit card, internet banking (usually in French), a checkbook and fraud and theft insurance for a flat monthly fee. On average the cost is five to nine euros per month. All the banks we deal with offer English speaking client service.
The minimum deposit to open a French bank account is usually 1500 euros however this can be negotiated. Be very careful to put money in your French bank account as soon as you received your account details as fees will be charged for overdrawn accounts. Insufficient funds for checks submitted or rejected direct debits is a much more serious offence in France than in many other countries and is to be avoided.
Do equity release loans exist in France?
Equity Release is a term commonly used to indicate the release of capital (the amount you own free and clear) from a real estate property. French banks are not familiar with this product and do not offer it.