Why getting a mortgage in France is now so much easier for buyers from the USA than the UK
US resident buyers of property in France now have easier access to French euro mortgages that UK residents.
It’s hard to imagine that just a few years ago, BNP, a French bank, used to regularly report that UK buyers were one of the largest groups of overseas buyers of property in France. Then came Brexit. Talk to a French bank now about overseas buyers of houses in France and they will tell you UK buyers make up less than 5% of their expat mortgage book.
What has happened? The main issue has been the (lack of) financial settlement within the Brexit deal, which means that for French banks, they now have to have the correct UK licence to be able to lend to large proportions of (but not all) UK resident buyers, since Britain left the EU. The bureaucratic hill is now so steep, most French banks don’t bother to apply for a UK licence, or they limit themselves to the very specific part of the market which they can still operate in.
Yet many of these same banks have had long standing regulatory arrangements in the USA, another important source of property buyers in France, so these banks now find it easier to lend to US residents who want to buy a dream house in France than to UK buyers.
A typical US buyer of a house in France looking for a French expat euro mortgage can expect to put down a deposit of around 30%, but then they will be able to house hunt wherever they wish, assuming they are buying a house priced at €150,000 or more.
For the UK buyer, it is very different. French banks will now only deal with the professional or more experienced buyers from the UK meaning, in practice, the relatively wealthy. UK based buyers will need to have a minimum income of at least €150,000 euros and hold assets of at least €500,000 euros in many cases. These rules do not apply to US buyers in France.
Other French euro mortgage banks have approached the UK based buyer of French property in different ways – the purchase of a French house has to be via a company, normally an SCI which has to have at least two shareholders, after this, there is likely to be a minimum loan size of €300,000.
However, the UK buyer has a small advantage here, as often they will only need a 15% deposit.
So whilst UK based house hunters are certainly not locked out of the once buoyant French property market, they now make up a far smaller proportion of overseas buyers. The French banks don’t mind, as they have switched to lending to US based buyers who have largely filled the gap.