House Buying in France
Euro Mortgages in France: Arranging French Housing Finance
Lending criteria in France are far more complex and restrictive than in the UK and the whole process can take quite a lot longer than most people expect.
French Mortgage lenders expect clients to put down at least a 15% deposit and to have a reliable income stream. If a client is able to put down a 30%-50% deposit, lower interest rates are available.
Lenders will stipulate that a client’s borrowings and liabilities do not exceed around 35% of income. This is why French lenders will ask for details of other mortgages as well as current account statements, to ensure there are no other debts or repayments that may have been overlooked. We work with French specialist lenders and French banks who will take into consideration income from buy to let houses and other non salary income, all of which can help when presenting a loan request to the bank.
Just as in the UK, lenders do not like a loan to go beyond a client’s 80th birthday. It is better, though, if the loan will be repaid by age 65 for the simple reason that French mortgage lenders insist upon life cover being taken out, generally via their own insurer. If cover starts after a 65th birthday, premium costs rise considerably.
Nowadays, prompted by popular TV lifestyle programmes, many buyers are tempted to give up their UK career, sell their house and try their luck abroad. This can be fine if they are cash buyers, but if a euro mortgage is still needed, this may be virtually impossible to source, as the borrower is effectively unemployed.
Sometimes it is better to look at other more creative ways of funding your French purchase, such as through raising capital by using your UK property as security. We have considerable experience helping people raise capital by using their UK home as security to then buy for cash abroad.
Currency risk needs to be considered if a buyer has a Euro loan and Sterling income. In such circumstances, not only will the borrower’s liabilities rise if interest rates rise, they will also go up if Sterling weakens against the Euro, as more pounds are needed to buy the same number of Euros.
Capital release and home improvement Loans are available now in France, but some banks will levy restrictive terms, so it pays to search the market for the right product.
The complexities of currency, language, customs and local law all add up to make negotiating a euro mortgage a far more complex task than the equivalent UK product. Add to this the relaxed French attitude, which is one of the main reasons so many people move across the Channel, and you can see why house hunters should allow plenty of time to get their finances in order before viewing their dream home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Changes in the exchange rate may increase the sterling equivalent of your debt.
We charge a fee for UK mortgage advice. For details, please click here.
Life cover may be required to effect a mortgage.
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