There is every reason to take advantage of the low interest rates in France if you can. Thanks to our excellent relationships with local mortgage brokers, we can help you get the financing you need.
Going directly to just any French bank as a non-resident can be difficult if not impossible. Unless you have a regular salary going into a French account, they tend not to be interested in dealing with foreign clients.
The good news is that obtaining a mortgage here can be doable. There are a few options, including applying with a French lender that specializes in non-resident/foreign clients. While there are fewer and fewer banks that will to do this, we do have relationships with those banks that are willing.
French Loan Facts
Who the lenders are
In France there are lending institutions that specialize in mortgages designed specifically for non-residents...but not many, and fewer now for American borrowers due to the FATCA regulations (Foreign Account Tax Compliance Act). That doesn’t mean it’s impossible! Just a bit more difficult! But thanks to Adrian Leeds Group’s select mortgage brokers, we can assist you with your applications to these lenders.
In France, the affordability analysis by the lending banks is principally income-based, rather than asset-based. Your net asset profile forms an important part of the analysis but does not determine how much one qualifies to borrow, as is normally the case in North America. The French banks apply an affordability ratio which dictates your monthly credit commitments (to include the proposed new French mortgage) can not exceed one-third of the monthly gross income.
Investment income can be included in the affordability analysis and it could be possible to include some rental income from the property you are purchasing. Monthly credit commitments would include your car payments, other mortgages, rents, and other debts, which are deducted from your gross income. Consumer debt (credit card balances), taxes, and insurance premiums are not deducted from your gross income.
The maximum term for a non-resident is typically 20 years and must be paid in full by the age of 75.
Life insurance is mandatory
A mandatory life insurance policy, assigned to the lender is a condition of borrowing, and therefore your age, lifestyle, and health history becomes a factor contributing to the cost of borrowing. Depending on the loan amount for which you are applying and your age, medical exams may be required to qualify for the insurance insurance, and therefore the loan.
how much you can borrow
Typically borrowing up to 70% or 80% of the purchase price (net of purchase costs) is achievable. It is not common practice for the lenders to perform an independent appraisal of the property for lending purposes, but they reserve the right to do so.
The notarial taxes and fees cannot be consolidated in the loan. It can be possible to include the agency commissions, if they are included in the sale price and to be paid by the seller. In the case when the buyer pays the agency commissions, the basis for the notarial taxes and fees is reduced, but the bank will not finance them.
The mortgage can cover renovation costs
It is not currently possible to include renovation costs in the borrowing from the lender.
Current interest rates are based on the Euribor
The type of loan product offered (fixed or variable) depends on the prevailing market conditions. In the recent low-interest rate climate, the lenders have only offered fixed rates, but as the cost of borrowing increases, the lenders may offer fixed and variable options as well.
- We highly recommend understanding your borrowing power before visiting properties.
- A loan is a commitment and must be repaid. Check your ability to repay before committing yourself.
- Your payments will be automatically deducted from your French bank account.
- We recommend you consult your accountant or tax attorney for advice regarding mortgage interest deductions on your tax return.
Your Mortgage Broker in France
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. Simon Conn is an Introducer Appointed Representative of Seico Insurance & Mortgages Ltd Limited which is authorized and regulated by the Financial Conduct Authority under number 300024 in respect of UK mortgage, insurance and consumer credit-related activities only. If a mortgage is denominated in a currency other than your home currency, there is a risk that changes in the exchange rate may increase the equivalent value of the debt in terms of your home currency.
We will provide you with a free initial consultation and we will always explain exactly what you will be charged before you choose to proceed with an application. As we offer a personalized service, our charges can vary and the actual amount payable will be shown on any eventual quote. It may also will depend on the country where you require financing, who arranges the financing for you, plus your personal circumstances and loan requirements. It is important that you seek independent legal and taxation advice on any property that you are going to purchase.