Q. How long does the mortgage process in France take?
A. The mortgage process in France usually takes between six weeks and three months to complete, depending on the efficiency and response times of both the borrower and the lender. It's worth remembering that the property purchasing process in France is usually a three month affair also. For this reason it's well worthwhile getting a 'decision in principle' from the lenders right from the beginning and before you've even found your French property.
Q. What is a 'decision in principle'?
A. Based on your financial details, lenders will often indicate the maximum mortgage they will be willing to give you at a future point. Having a 'decision in principle' in your pocket smooths the process and saves considerable time when you find the French property of your dreams, particularly when there are other parties interested in the same property and they don't have one. As is often the case when two different parties are interested in the same property, the seller will prefer to sell to the one who is already assured of a mortgage rather than rely on the one who is not so assured.
Equally, you will know your maximum property price and it can help to speed up the buying process when you find your dream home in France.
Q. What percentage of the French property value will I be able to borrow?
A. 70-85% of the French property value. Most lenders in France will let you borrow 70% of the value of your property, and some will let you borrow more. The upper limit is 85% of the value of the property excluding Notaries and agency fees.
Q. How much can I borrow?
A. As a rule of thumb, take 1/3 of your gross monthly income from all sources, then deduct the amount you pay out each month for all your existing loans (mortgage, rent, car loan, personal loans, alimony, etc) and the amount left is what you have available to service a mortgage.
Q. Are self-employed people accepted?
A. Yes, but self-employed people will have to provide a minimum of two years' accounts.
Q. What will the interest rate be?
A. Usually between ½ - 1% p. Below comparable UK rates depending on which type of mortgage you choose, fixed or variable rate. Fixed rate mortgages, where the interest rate is fixed throughout the life of the loan, are usual for borrowers in France, but variable rate mortgages are also available. Usually, variable rates are lower than fixed rates, although as their name implies their levels vary in line with the markets rates. With a fixed rate mortgage you will pay the same rate throughout the life of the loan.
Q. Are buy-to-let mortgages available in France?
A. Yes they are, provided you let the property permanently, you can get a buy-to-let mortgage and the income from this will be taken into account by the lender when assessing your situation.
Q. How would I pay a French mortgage?
A. Simple, open a French bank account and set up a standing order. You will need a French bank account to pay for your French property's services, such as water, electricity, telephone, etc, and the easiest way to pay these is also by standing order. Then you simply arrange to transfer funds from the UK to your French account as and when required. When you have found your French property, the Agency concerned will help you to open a bank account as a matter of course.
