Mortgages in France - General Advice

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French Mortgages - General Information

There are considerable differences between lending in France and raising finance in the UK. Whilst the UK system applies income multiples (i.e. 3 x your gross income) the European view is based on your ability to repay the loan. Most European banks lend on the basis that your total monthly repayments (capital and interest) should not exceed 35% of your net monthly disposable income. To give yourself some idea of the maximum you can borrow in France, multiply your monthly net income by 35%. Then deduct from this your total U.K monthly credit outgoings (loans, credit cards, mortgage/rent). The resulting figure will give you a good idea of your maximum monthly French mortgage payment.

Generally, we can arrange a French mortgage up to a maximum of 85% of the lower of the value or purchase price of the property.

As a general guide, the cost associated with a purchase of a previously occupied property equates to approximately 10% of its value. The cost associated with New Build property will include TVA (French VAT) at 19.60% charged on the purchase price although this will normally be included in the purchase price quoted to you.

Once you have chosen your apartment or house, you must sign a preliminary purchase contract. For existing structures, this contract will take the form of a " compromis de vente “, the equivalent of an English agreement for sale and purchase; for a new property, you will need to sign a “contrat de réservation”, the equivalent of an expression of intent.

If you do not have an existing French bank account, consider opening one when you apply for mortgage financing. This will facilitate setting up your direct debit mortgage repayments.

Once your mortgage application has been approved, you will receive a loan offer by registered post. This will be a formal undertaking from the Lender to you. The offer is normally valid for 30 days. At the end of the 10-day cooling off period required by French law, you simply return the acceptance form together with the postal delivery slip showing the date on which you received the loan offer to the Lender.

A notary will prepare the deed of sale ready for your signature. There is generally a delay of approximately three months between signing the preliminary sales contact and signing the final deed of sale. You should expect to pay notary and other fees at the closing when the final deed of sale is signed

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