Tee France - French Property Solicitors
French Mortgage Advice
You may require a loan to fund your purchase. We will ensure that it is clear in the contract that you will only complete the purchase if the mortgage is obtained – so no nasty surprises! Typically a mortgage secured on a French property will not exceed 80% of the value of the property.
Below are some FAQs, but please do give us a call if your query is not answered here
1. How much can I borrow?
Typically French lenders will consider the use of between 30% and 35% of the applicants gross income, (less how much is paid to service debt in the UK or elsewhere), to calculate this figure.
2. What terms can I borrow over?
Typically terms range from between 8 to 25 years.
3. How much deposit do I require?
This depends on the lender but usually you will asked for a deposit of between 15% and 30%. Generally, the larger the deposit, the wider the choice of products and interest rates.
4. Which mortgages are available?
This again depends on the lender. Some mortgages allow for capital overpayments without penalty at any time. Others have an initial 5 or 7 year term where a redemption penalty is payable concerning a capital overpayment. Some fixed rate mortgages do not allow overpayments at any stage, unless a penalty is paid. Variable, fixed and capped rate mortgages are available. We strongly recommend you seek advice as they differ substantially from most mortgages in the UK market. For example, some variable rate mortgage repayments remain stable over the mortgage term, allowing you to budget. This means that should interest rates increase, there could be a cap on any increase in monthly repayment. The lender would extend the term to take into account higher interest rates. Conversely, the term could reduce if underlying interest rates were lower than that paid throughout the term.
5. Can I release equity from my French Property to clear debts or buy a car?
A number of lenders will consider applications from home owners to release equity. We are aware of one lender who will consider releasing up to 40% of the property value, and another who will consider up to 70% - should their lending criteria be met.
6. How long does it take to arrange?
This depends on how complicated or straightforward a case is. Typically a euro mortgage offer letter can be issued between 6-8 weeks.
7. Am I required to open a French bank account to service mortgage repayments?
Yes, currently this is a standard requirement.
8. Will I be required to take out life insurance to cover the mortgage?
In most cases, mortgages require a relevant life assurance policy assigned to them. Usually lenders will quote for the standard cost of insurance, within the mortgage repayments. Lenders generally require 100% of the mortgage liability to be covered, and quote for this. If you are applying for a joint mortgage, the quote will usually be on the basis of 100% on one person, 0% on the other, or a 50/50, 70/30 split etc (depending upon your earnings split). Should you both require 100% protection, the standard cost could double.
9. What is a Forward Currency Contract?
This is an agreement to buy or sell a country's currency at an agreed rate of exchange in the future. It allows you to know how much your foreign currency transaction(s) will cost in sterling, thus giving peace of mind.
