How to Get a Mortgage in France
Who are the lenders?
In France there are lending institutions that specialize in mortgages designed specifically for non-residents. French Property Insider Consultants can assist you free of charge with applications to these lenders.
What qualifies you for a loan?
Loans are income based and as such, existing assets do not play a role in determining how much one qualifies to borrow. That amount is calculated as the difference between the current debt service ratio (current monthly obligations as a percentage of monthly gross income) and a maximum of 33%. In other words, the new monthly mortgage payment, when added to existing monthly obligations cannot exceed 33% of gross income.
Net rental revenue on existing investment properties may be considered as income as would investment income. Consumer debt (credit card balances), taxes and insurance premiums are not deducted from gross income. Car payments, other mortgages, rents and other debts are deducted from gross income.
The maximum term of the mortgage is calculated roughly as 75 yrs less the borrowers age.
A mandatory life insurance policy, valid for the term of the mortgage, secures the loan.
Why is life insurance mandatory?
It is national law that requires all property to be secured by a life insurance policy so in the event of the borrower’s death, the property is free and clear for inheritance purposes.
What if I already hold a life insurance policy?
The policy must apply specifically to the mortgaged property. Normally, the policy is provided by the lender’s associated insurance company. The borrower must complete a medical questionnaire and often undergo an exam to qualify for the insurance and therefore the loan.
How much can I borrow?
Traditionally up to 80% of the appraised value of the property. The lender will appraise the property at no cost to the borrower.
Will the mortgage cover Notaire fees?
Will the mortgage cover agency fees?
Will the mortgage cover renovation?
Yes, the lender will provide up to 80% of the estimated value of the property after renovations, based on renovation estimates from contractors.
What types of loans are available?
1. Fixed rate 2. Variable 3. Interest Only 4. Combination Loans
Do all lenders offer the same products?
No, each lender offers a variety of different products.
What are the current interest rates?
Euribor plus margin, often 3-month or 12-month. The Euribor is the money market reference rates for the euro: http://www.euribor.org
Can I get pre-approved?
Lenders will accept applications prior to purchase of a property, but will provide a “pre-approval in principle” only, estimating the applicant’s borrowing power.
We highly recommend understanding your borrowing power BEFORE visiting properties which may not meet the lending capacity.
Who is held responsible for repayment?
Those on the title deed of the property are held responsible for repayment of the mortgage.
How do I may repayments?
Your payments will be automatically deducted from your French bank account.
Can I deduct the interest portion of the loan on my U.S. tax return?
Yes! We recommend you consult your accountant or tax attorney for advice.
How do I get started?
Contact French Property Loan: [email protected]