French mortgages are available for the purchase, renovation and construction of a property.

Re-mortgages are not so readily available as they are in UK, but in some circumstances they can be arranged – replacing one lender with another for better rates interest rates or terms and also to re-coup monies that have been spent on renovation or improvement work.

• Under French law, all mortgages are full status and lenders are obliged to ensure that a person applying for a mortgage is financially able to meet the repayments. Proof of income and outgoings are required and you will be asked to supply at least three recent monthly payslips and bank statements.
• A mortgage of 80% of the purchase price is normal, but may be higher depending on your status as a purchaser. Legal fees generally will between 7% and 8% of the purchase price but can vary between 3% and 13%. The mortgage is secured on the property.

A valuation of the property is carried out, but not in the way you will be used to in UK. The valuation is only based on whether the property is worth the purchase price and does not include any structural inspection at all.

French mortgages are repayment loans and the maximum term available is 20 years or up to the age of 70 (whichever is the earlier). Life assurance is required by French law to cover the loan and existing life policies are not generally taken into consideration.

The Variable Rate Mortgage

The Variable Rate Mortgage is linked to the variations in the central bank lending rate. However the monthly payments usually remain the same when rates change and the mortgage term will vary according to the rates movement. There is usually no early redemption charge and you may be able to convert it to a fixed rate mortgage at any time, but this option is again dependent on the lender.

The Fixed Rate Mortgage

The Fixed Rate Mortgage is fixed for the whole term, so you will know exactly how much you will have to pay and how many payments you will make. There is an early redemption charge payable on fixed rate mortgages. Some lenders may not allow the option to convert it to a variable rate mortgage at a later date.

The Interest Only Mortgage

Not readily available from all lenders, but they do exist and in two different ways:

• Purely interest only – you pay the interest and at the end of the term you pay off the capital.
• You deposit a set amount and over the term calculated by the lender, your capital should have grown to repay the original mortgage amount.

The amount you can borrow is based upon your ability to service the loan. The general guideline being that of a monthly income, 33% should cover existing outgoings, the monthly repayment of the new mortgage and life assurance cover. Outgoings are liabilities such as mortgage/rent in the UK, personal loans and maintenance commitments.* For UK tax payers use gross monthly income. For French tax payers use gross monthly income less social charges, do not deduct tax.

• If you are employed, the lender will base income on evidence of payslips and the amount credited to your bank account on a monthly basis.
• If, however you are self-employed, your income is assessed from your accounts as the average on the last three years net income.

Additional income from pensions or rentals will also be taken into consideration.

If you would like to receive an illustration of the possible monthly costs and the maximum you can borrow in France, please complete and submit our Preliminary Questionnaire and we will send you the information.

The lender will also charge an arrangement fee. Each lender has a different scale of fees, but generally charge 1% of the total mortgage subject to a minimum and maximum charge. The fee is usually payable when you return your acceptance of the mortgage offer.

Another requirement is to take out a life assurance policy for the duration of the mortgage with a life assurance company approved by the lender. Life assurance to cover a mortgage is mandatory in France and a quotation should be submitted with the mortgage application form. After receiving and signing the mortgage offer, the life policy will start as you have committed yourself to purchasing the property.

• Buildings and contents insurance need to be in place on completion of the purchase.

Your notaire will ensure that all the necessary legal work is complete and that you have been granted a mortgage as well as having your life assurance and buildings and contents insurance in force before the deed of sale (Acte Authentique de Vente) is signed.

• There are fees that are now payable such as Transaction Charges and the Notaires fees.

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