French Mortgage Guide

• Term : French mortgages are available from 6-40 years, although age 80 will be the maximum age for repayment to be completed.

• If we do recommend a French lender, the documentation supplied will always be in French, so if you're French isn't good you may want to stick with a UK lender.

• Non-residents can borrow up to 90% LTV from French lenders and 70% LTV from UK lenders.

• French lenders will not give a mortgage to a British company; however it is common to establish a French company solely for the purchase of a property. This is called a Société Civile Immobilière (SCI) and it may be preferable to hold a property this way to avoid French inheritance tax issues.

   

• French banks lend on the basis that your total monthly repayments (capital and interest) should not exceed 35-40% of your net monthly disposable income.

   

• The notary fees associated with a purchase of a previously occupied property equates to approximately 10% of its value. The cost associated with New Build property will include TVA (French VAT) at 19.60% charged on the purchase price although this will normally be included in the purchase price quoted to you, and reduced notary fees of 3%.

 

• Releasing equity and re-mortgaging in France is not difficult and all banks will provide this facility. If you want to build or renovate a property flexible finance can be arranged where interest is rolled up and added to the loan until repayments begin.

   

• Variable rate and fixed rate repayment mortgages are available and you can fix for terms of up to 25 years. Interest only mortgages are also available, and can be tied into saving plans. Interest only mortgages are especially suited to getting maximum tax relief on rental income from holiday or residential lettings.

   

• In France many developments have been sold on a Leaseback basis and a range of products tailored to that market is available. We can also offer Currency Switch mortgages for the astute borrower, which allows you to switch the loan between currencies twice a year with no charge or more often for a fee.

   

• Buyers pay the estate agents fees in France, which can vary widely, and can explain why the same property can be for sale at many different prices, because the agents ask anything from 2-7% for handling the sale. These fees can be added to the mortgage, whereas the Notaire's fees cannot. The notaire will generally act for both parties to a transaction, and their function is to ensure that the transaction is dealt with in accordance with French law, which does not mean that they have your interests at heart, so be careful and take a second opinion if you feel uncertain.

   

• Once you have chosen your apartment or house, you must sign a preliminary purchase contract. For existing structures, this contract will take the form of a " compromis de vente “, the equivalent of an English agreement for sale and purchase; for a new property, you will need to sign a “contrat de réservation”, the equivalent of an expression of intent.