# French Mortgage Criteria



## Jobie67

My husband and I are looking to buy a property in France, we will have the appropriate deposit but will require a mortgage. We haven't sought any financial advise as of yet, and I've seen some confusing reports on French mortgage criteria, in terms of annual earnings, savings after the sale of the property and on top of savings (post sale), also having up to 24 months mortgage payments in place in the bank account. We are both in our early 50's and this will initially be just a holiday home until retirement.
Can anyone please share any experiences of what funds you need to have in place and French mortgage criteria?
I'm beginning to think the dream is not a reality within the timescale we were hoping for!


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## Bevdeforges

Have moved you over to the France section since I think you're asking about obtaining a mortgage in France for a French property purchase. If that's not the case, let me know and I'll move your query back.


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## Jobie67

That is correct, I'm new to the forum and wasn't sure where to post the question.

Thank you.


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## Clic Clac

Isn't it easier for you to get a loan in the UK, and make a cash purchase over here?


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## EuroTrash

Jobie67 said:


> My husband and I are looking to buy a property in France, we will have the appropriate deposit but will require a mortgage. We haven't sought any financial advise as of yet


I think it might be more constructive to talk to your bank, if you have one, or if not/if your bank aren't forthcoming with a "courtier"/broker and see what they say, rather than ask other people what they are likely to say, and worry about all kinds of things that may never arise. The answers you get will depend on your specific circumstances - your age, your employment situation, your other sources of revenue etc - and the experiences of other people who aren't in the exact same circumstances will be different.

As I understand it, the basic rule in France is that your total monthly loan repayments cannot exceed one third of your secure monthly income. Also I believe that the maximum duration of the loan has recently been tightened up, or possibly the legislation is still being debated.

If you're UK resident and your income is in £ from a UK source, a lender will likely see this as an additional risk (harder to verify the sources, exchange rate fluctuations, harder to pursue the debt) and may be hesitant and/or impose extra conditions. But a good courtier will know which lenders are more willing to deal with non residents.

EDIT - I think Clic Clac has given you a better suggestion in far fewer words


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## Jobie67

Clic Clac said:


> Isn't it easier for you to get a loan in the UK, and buy a place for cash over here ?


Loan interest rates are much higher than mortgage rates, therefore not cost effective. Plus most loan companies want to secure the loan against "something", e.g. like the new car you want to buy or your property, and need evidence of your purchase, before they will authorise funds.


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## Jobie67

EuroTrash said:


> I think it might be more constructive to talk to your bank, if you have one, or if not/if your bank aren't forthcoming with a "courtier"/broker and see what they say, rather than ask other people what they are likely to say, and worry about all kinds of things that may never arise. The answers you get will depend on your specific circumstances - your age, your employment situation, your other sources of revenue etc - and the experiences of other people who aren't in the exact same circumstances will be different.
> 
> As I understand it, the basic rule in France is that your total monthly loan repayments cannot exceed one third of your secure monthly income. Also I believe that the maximum duration of the loan has recently been tightened up, or possibly the legislation is still being debated.
> 
> If you're UK resident and your income is in £ from a UK source, a lender will likely see this as an additional risk (harder to verify the sources, exchange rate fluctuations, harder to pursue the debt) and may be hesitant and/or impose extra conditions. But a good courtier will know which lenders are more willing to deal with non residents.
> 
> EDIT - I think Clic Clac has given you a better suggestion in far fewer words


Thank you for the advice.


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## EuroTrash

Jobie67 said:


> Loan interest rates are much higher than mortgage rates, therefore not cost effective. Plus most loan companies want to secure the loan against "something", e.g. like the new car you want to buy or your property, and need evidence of your purchase, before they will authorise funds.


Do you have equity in a UK property, could you remortgage that?


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## Jobie67

EuroTrash said:


> Do you have equity in a UK property, could you remortgage that?


I do (quite a bit that would cover the extra needed) and I have tried that avenue, but my mortgage lender won't release the equity for a property overseas and I'm locked into a fixed rate mortgage deal for 5 years, so can't move the mortgage either without penalty.


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## BackinFrance

Jobie67 said:


> Loan interest rates are much higher than mortgage rates, therefore not cost effective. Plus most loan companies want to secure the loan against "something", e.g. like the new car you want to buy or your property, and need evidence of your purchase, before they will authorise funds.


French mortgage interest rates are based on the risk as determined by the lender and of course the property you purchase can be seized if you don't meet the repayment schedule, though you would still be responsible for any shortfall and costs incurred by the lender as part of that whole process. A French bank might advise you that it will approve the loan, but that in no way equates to pre-approval. Repayments must be no more than 35% of your income (month) and the terms of the loan no greater than 25 years. There are also fees to be paid before the mortgage funds will be released and these have to be paid from your own pocket and not from the amount loaned to you by the mortgagee.


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## EuroTrash

Jobie67 said:


> I do (quite a bit that would cover the extra needed) and I have tried that avenue, but my mortgage lender won't release the equity for a property overseas and I'm locked into a fixed rate mortgage deal for 5 years, so can't move the mortgage either without penalty.


That's an emmerde.
Maybe you were too honest, couldn't you have said you wanted to the equity to extend your property? It wouldn't have been a lie exactly, wouldn't even have registered on the Johnson scale of untruths. Thirty or so years back my neighbour in the UK kept remortgaging every few years, it used to make my eyes water to think what her mortgage must be, and apparently she said "home improvements" every time and they never asked for details and she spent the money on whatever she fancied. But perhaps UK lenders are a bit more rigorous these days.
(Off topic ramble coming up: My neighbour worked part time from choice, in order to stay below the threshold for repaying her student loan, and she always had loadsa money. I sometimes wonder how it ended. I hope her bubble didn't burst because she was a nice lass and she saw nothing wrong in it, which technically I suppose there wasn't but I always thought it was a funny way for a country to organise its economy,)


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## EuroTrash

BackinFrance said:


> French mortgage interest rates are based on the risk as determined by the lender


Can I air a little of my newly-acquired knowledge here, before I forget it again?
The Banque de France sets a taux d'usure which is reassessed each trimestre, capping the interest rate that lenders can apply to loans. The net result is that if a bank feels an applicant is high risk and the maximum interest rate they're permitted to charge doesn't adequately reflect that risk, they will refuse the loan.
This is different from UK for instance where lenders can offer sky high interest rates to compensate for high risks.
Recently the taux d'usure has been very low, resulting in a lot of borderline applications being refused.
However as of 1.1.22 the taux d'usure has been increased, for the first time in ages.
Which should mean that higher risk applications that would have been refused last year stand a better chance of being accepted this year, albeit at a higher interest rate.








Taux d'usure







www.banque-france.fr


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## Jobie67

EuroTrash said:


> Can I air a little of my newly-acquired knowledge here, before I forget it again?
> The Banque de France sets a taux d'usure which is reassessed each trimestre, capping the interest rate that lenders can apply to loans. The net result is that if a bank feels an applicant is high risk and the maximum interest rate they're permitted to charge doesn't adequately reflect that risk, they will refuse the loan.
> This is different from UK for instance where lenders can offer sky high interest rates to compensate for high risks.
> Recently the taux d'usure has been very low, resulting in a lot of borderline applications being refused.
> However as of 1.1.22 the taux d'usure has been increased, for the first time in ages.
> Which should mean that higher risk applications that would have been refused last year stand a better chance of being accepted this year, albeit at a higher interest rate.
> 
> 
> 
> 
> 
> 
> 
> 
> Taux d'usure
> 
> 
> 
> 
> 
> 
> 
> www.banque-france.fr


Other than being a UK resident, financially I think we're in a good position. We have good jobs, exceed the amounts quoted, have good income and other properties in the UK which we rent out. The stumbling block is if the criteria does mean we need extra funds and mortgage payments evident in our bank account post sale, then we need to save longer than anticipated. We were hoping to make the dream a reality later this year but if we can't it's a few more years saving unfortunately. Hence why I was trying to obtain others experience.


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## BackinFrance

However you have to bear in mind that the OP is not resident so there remains a real possibility of refusal.


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## EuroTrash

Jobie67 said:


> The stumbling block is if the criteria does mean we need extra funds and mortgage payments evident in our bank account post sale


I have never heard of that but equally I don't know of any rules to prevent a lender imposing that as a potential condition. I believe it's no longer allowed for landlords to insist on having a year's worth of rental payments set aside as a bond, as they used to be able to, but that's different.
I would have thought that the main issue would be the lender accessing enough data to satisfy themselves firstly that the company you work for in the UK is financially secure and at absolutely no risk of liquidation in this unsettled post Covid economic climate, and secondly that your own jobs are secure in the long term. Is your employer a blue chip, do you have job contracts that state in so many words that it is a permanent appointment? 
Find yourself a good broker and get the ball rolling. You may get a refusal or two but hopefully you will get there in the end.


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## Clic Clac

Jobie67 said:


> and other properties in the UK which we rent out.


Can't you raise cash against any of these ? 
They must have increased in value over the past two years. 

If not to remortgage then you could get a secured loan. Even a higher % is still cheap at the moment. My mortgage used to be 12-15% back in the day, and I still consider 10% a fair rate.


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## EuroTrash

Clic Clac said:


> Can't you raise cash against any of these ?
> They must have increased in value over the past two years.
> 
> If not to remortgage then you could get a secured loan. Even a higher % is still cheap at the moment. My mortgage used to be 12-15% back in the day, and I still consider 10% a fair rate.


With the advantage that it takes exchange rate fluctuations out of the equation. Thus far since Brexit things have been pretty stable and the pound is bearing up well, but committing to a long term investment in a different currency is always a gamble.


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## Bevdeforges

Not sure how Brexit is affecting this, but a "standard" mortgage here in France very often requires having a local (i.e. French) bank account that is receiving regular monthly deposits from your income source so that the bank granting the mortgage is assured of being able to pick up their payment each month. I know one common "culture shock" for many Brits and Americans is that you don't actually pay your housing bills (rent or mortgage) each month, but rather the mortgage holder simply takes the payment from your account on the appointed day.


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## Crabtree

Prior to Brexit it was possible to pursue mortgage defaulters and non payers in France who reside in the UK through the UK courts I believe that this is no longer possible so a French financial institution may be wary of offering you money in the same way that your mortgage company in the UK will not offer you money as the property is in France If you are set on having a French house then if I was in your position I would sell one of my rental properties in the UK 
Could the other option be an SCI? I have no experience of this but it looks like it could be an option





SCI family | Notaires de France







www.notaires.fr


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## eairicbloodaxe

Jobie67 said:


> Other than being a UK resident, financially I think we're in a good position. We have good jobs, exceed the amounts quoted, have good income and other properties in the UK which we rent out. The stumbling block is if the criteria does mean we need extra funds and mortgage payments evident in our bank account post sale, then we need to save longer than anticipated. We were hoping to make the dream a reality later this year but if we can't it's a few more years saving unfortunately. Hence why I was trying to obtain others experience.


We did this a few years back and were pretty much in the same boat as you. 

Forget about getting a French mortgage if you are not resident - it's too much hassle.

Remortgage your whole property portfolio, including the buy to lets. Yes, you might have to pay a penalty to get out of the current deal on your home, but that's just a cost of realising your dream earlier. 
Then buy your French property for cash, there are no exchange rate worries once it's done.

You may want to look at buying in France via a SCI structure because that has certain tax advantages (especially for inheritance). In which case you lend the money to the SCI.

UK remortgage application reasons are a tick box exercise. It is for Home Improvements - you are extending your home... so that is has more rooms and extends over the English channel!

Kind regards



Ian


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## Kenpimentel

We got a 7 year mortgage from HSBC.fr but, we're also new residents and this is our principal home. For me, my age meant that they wouldn't give me a loan beyond turning 70. They also required a special health insurance policy, but the total "cost" amounts to a 1.4% loan. HSBC.fr had the best rates when we were shopping (as acknowledged by the broker).

I did find Linda (a mortgage broker) very helpful and would recommend talking to her.


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## MoonlitKnight

Kenpimentel said:


> We got a 7 year mortgage from HSBC.fr but, we're also new residents and this is our principal home. For me, my age meant that they wouldn't give me a loan beyond turning 70. They also required a special health insurance policy, but the total "cost" amounts to a 1.4% loan. HSBC.fr had the best rates when we were shopping (as acknowledged by the broker).
> 
> I did find Linda (a mortgage broker) very helpful and would recommend talking to her.


Thank you for this information! Just lurking on this forum, in the planning and info-gathering stages, and found your post and link the the broker very helpful. I'm hoping to move in a year, but thinking it might be easier, logistically, to buy a place in France as a vacation home first, THEN sell my US property and move (paying off the French mortgage with the proceeds)


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## BoilingFrog

I looked into raising a mortgage on my UK home to release funds for a house purchase in France. There certainly are lenders that will do this. Depending on your other circumstances of course. I used John Charcol, who were good and I have previously used Which Mortgage brokers and they were also good. For such a situation I think the broker route is definitely the way to go. Their fee is only payable on completion so no harm in doing all the application and getting an agreement in principle. From memory this is valid for 6 months, but may be extended if you have trouble finding a suitable property. I think you can expect the mortgage interest rate offered to be slightly higher than the best in market for vanilla mortgages, but not by too much (extra 1-2% or so if I remember).
If that then leaves you with a UK property that you will rent out you need to look into all the implications of tax on the rental income in UK and France etc.


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## eairicbloodaxe

BoilingFrog said:


> If that then leaves you with a UK property that you will rent out you need to look into all the implications of tax on the rental income in UK and France etc.


You also need to make sure that the mortgage you have raised on your UK property is a BTL one, or capable of being switched to one by the lender. 

If not, you run the risk of the bank recalling the mortgage on 14 days notice if they find out. 

If you continue to live in 2 houses/countries, shuttling between them, and don't rent out, you'll be ok.


Kind regards



Ian


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