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Why should I use Mortgage in France?

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Mortgage in France is an independent Mortgage broker working with all the leading French and international banks. We have been assisting English speaking expatriates and non residents buying properties in France for over ten years. Our British team has the experience and expertise to sourcing the best products and conditions. Your mortgage consultant will assist and guide you throughout the whole process and will provide you with invaluable tips and advice. Benefit from our free and personal service while securing the best conditions available.

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I have an atypical profile can I still get a mortgage?

Yes it is possible, We can help any profile listed below:

  • Yacht Captain, Engineer, Chef or any other crew member working on a private or commercial superyacht or megayacht
  • Oil platform Engineers
  • Consultants working on contract basis
  • Recently started your own business
  • Retired
  • Buying through a French or foreign company
  • Have health issues
Specific documentation will be required for these profiles, please do not hesitate to contact your mortgage consultant to find out more

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What documents are needed for a mortgage application?

The supporting documents needed for a mortgage application can vary depending on your personal and financial situation. Once you have discussed your profile with your mortgage consultant, a tailored document list will be sent to you. Typically copies of the following list will be needed:

  • Passport
  • Marriage certificate
  • Recent utility bill of your principal address
  • Title deeds or rental agreement of your principal address
  • If salaried: Last three salary slips and Last two P60
  • If self employed: Letter from your accountant confirming your income, Last three years company accounts, Last two tax returns
  • Last three months bank statements
  • Sales agreement, (compromis de vente)
  • Mortgage application and Insurance forms to be completed

What projects can be financed?

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The projects that can be financed

  • Buying a French second home
  • Buying a French main home
  • Renovation loan
  • French bridging loan
  • Buy to let
  • Leaseback
  • Equity Release, release funds to finance your projects
  • Re-mortgage / Refinance your existing mortgage with a lower interest rate
  • Post financing, buy your property out right, then finance the property within 6 months after purchasing it

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How much can I borrow?

If you are a non fiscally French resident you can typically finance 80-85% of the purchase price, also known as the Loan To Value (LTV). However this rule is too general as it is only your personal and financial situation that will determine how much you can borrow. Some profiles could get 110% LTV financing, while some others would only get 50%. One of the most important elements in securing a mortgage in France is the income to outgoings ratio, more commonly known as the French Debt Ratio.

Only your mortgage consultant can provide you with your borrowing capacity.

What is the French Debt Ratio?

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The French debt ratio is a calculation of affordibility.
It calculate the fixed outgoings (loans, mortgages, rent, child maintenance etc) divided by the Income (Salary, rental income etc). The debt or affordibility ratio for a French mortgage should typically be inside 33%. All the French banks and lenders can have a very different approach on how they calculate this ratio and a different threshold levels on the maximum debt ratio they can accept.

As a rule of thumb, one third of the net income is the maximum outgoings. The ougoings is the sum of all your Mortgage instalments, loan repayments and rent. For example:
Your income is: 3 000 €
Your mortgage on your principle residence is 500 €
The mortgage instalments on the French property you are buying is going to be 500 €

1 000 / 3 000 = 0.33 or 33%, the debt ratio is 33%

Our mortgage simulator will calculate your debt ratio, however as mentioned above the various lenders may approach the calculation differently, it is recommended to ask your mortgage consultant to assist you.

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What are the Fees?

The agency fee, can vary depending on the agency and price of the property. On average the agency fee is around 5% of the purchase price.

Legal/Notary fees, frais de notaire, is governnment tax similar to the stamp duty. This is about 7% of purchase price if the property was built more than three years ago, for recently built properties the legal fees are approximately 3%

Mortgage registration cost, approximately 1% of the financed amount
Bank arrangement fee, varies from one bank to another. Typically this fee is no less than 700 € and maximum 1% of the loan amount.

Broker fees, unlike most mortgage brokers we do not charge a brokerage fee

Furthermore on completion day, you will have to pay pro-rata the “Taxe fonciere” similar to the land tax. For example if this tax is 1 200 €/year and you sign over the property in September, the vendor will pay 9/12th (900 €) of this tax bill and the buyer will pay 3/12th (300 €).

Example of a purchase with financing

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Mr and Mrs SMITH, a British couple are buying a holiday home in France.
The Purchase price is 100 000 € FAI ('FAI' means Frais d'Agence Inclus - Agency's fee included)
The legal/Notaire's fee is approximately 7% of the purchase price.
So in this case about 7 000 €
The mortgage registration cost is approximately 1% of the financed amount, in this case 800€
Total purchase cost is 107 800 €.

As a non residents they can finance up to 80% of the purchase price, in this case 100 000 € * 80% = 80 000 €

The personnal contribution is 27 800 €:
  • 20 000 € for the deposit
  • 7 000 € for the legal fees
  • and 800 € for the mortgage registration cost

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Why do I need a mortgage insurance?

Yes the mortgage insurance is a legal requirement in France. The financed amount will be insured at 100%. In the event of death or serious invalidity the mortgage insurance will pay off the mortgage.
Depending on the borrower’s age, medical history and loan amount a medical may be needed. To find out more about this contact your mortgage adviser.

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Do I need to open a French Bank account?

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Yes the instalments of a French mortgage must be direct debited from a French bank account. If the lender is a retails bank, then a bank account must be opened with that bank and the mortgage instalments will be serviced by this account.
If the lender is a mortgage company, then you can open a bank account with any French bank of your choice.
Your mortgage consultant can assist you with opening a French bank account.

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Do I need to set up house and content insurance?

Yes the house and content insurance is mandatory. The property needs to be on cover, the day before completion (signing at the Notary).
Your mortgage consultant can assist you with your house and content insurance.

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The sales agreement - Le compromis de vente

The 'Compromis de Vente' is a sales agreement, a contract between the seller and the buyer. It can be drafted by the real estate agent or by the notaire. Once the compromis de vente is signed by all parties, a 7 day cooling period starts, at this stage a deposit of 5-10% will be required. It is recommended to make this payment to the notaire. Beyond the 7 days, you are committed to purchase the property subject to securing the mortgage. In the event that the bank refuses the mortgage within the allocated 30-45 days, your deposit will be returned.   

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The Notary - Le Notaire

The notary or Notaire in French
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The Notaire is a legal professional with a public authority, the Notaire drafts the deed relating to the transfer of ownership and thereby ensures the enforceability of this contract. Thoughout the legal process of the transaction, the notaire advises you in order to clarify, structure and optimise your project according to your family situation, your professional status and tax implications.
It is recommended that you have your own notaire representing you, in which case the seller's and buyer's notaire will split their fee

Question: Do the notaire actually get 7% commission fee?
Answer: No the majority of the legal fee goes to the government, the notaire gets approximately 15% of the fee.

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What is the EURIBOR?

The Euro Interbank Offered Rate (EURIBOR) is an interest rate based on the average interest rates at which a panel of 57 European banks lend money to one another. The EURIBOR interest rates are calculated daily and made public at 11:00 Central European Time. The EURIBOR rates come in different maturities: 1, 2 en 3 weeks and 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12 months. 
A variable rate is usually composed of two elements, a fixed component the bank’s margin and the tracker for example the EURIBOR3M.

What French taxes am I going to pay?

The Taxe d’habitation,
Taxe fonciere, land tax
Capital gains Tax, this has recently changed. It used to be no capital tax to be paid after 15 years. Now you have to wait 26 years to be exempt of this tax. Contact your Mortgage consultant to get further details on this tax.

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What is the French Capital gains tax?

The French Capital gains tax
Currently being updated since latest amendment, come back soon..

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© 2015 Mortgage in France

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M.I.F. 2 bvd Grosso
06000 Nice FRANCE
Tel: +33 497 11 71 15

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