With French banks being more conservative than those in other countries, sometimes it can be difficult for those wanting to buy a property in France to obtain a French mortgage. Fortunately, our partners at International Private Finance provide their top tips for a successful application in the video above, which will help boost your chances of being accepted.
Hello, my name is Fiona, I am the joint manging director at International Private Finance. We specialise in arranging finance for clients looking to purchase a property in France, who are non-resident in France and based primarily here in the UK.
Today, I am going to talk to you about how to best improve your chances of success for a French mortgage application. The French banks are certainly more conservative than here in the UK, primarily because the property is in another country to where you are currently living, immediately they see that as a greater risk. Equally, French banks are more cautious with the way they lend, and they always have had a different way of calculating how much someone can borrow.
So in the UK, we are very use to lenders using an income multiple and in France they do it differently and use a debt to income ratio. What that means is they are looking at how much of your income is taken up with your existing finance and any contractual obligations you may have such as a loan, rent or a mortgage as well as looking at the cost of a new French mortgage. They that they do that is they allow approximately 1/3 of your income to be taken up by debt so for example, if your income is £3000 a month then £1000 needs to include your current mortgage, any personal loans and any minimal repayments on your credit cards as well as the cost of a new French mortgage.
There are several things you can do to improve your chances with a French mortgage application. Firstly, it is important to get your finances in order before you apply for a mortgage and you have got plenty of time to do that. I would recommend making sure that your bank statements are in good order, all the banks in France will request a minimum of 3 months’ worth of bank statements and they will go through them line by line so its important to make sure you that have no unpaid direct debits, checks that have bounced or going into or exceeding an overdraft limit. That all dramatically improves your chances of success as it shows the bank you can manage your finances successfully and equally, they are looking for a capacity to save. What that means is in looking at the calculation, they want to be able to see that you have some spare money to pay for and be able to afford a new French mortgage. So, they will look at our bank statements and if you are going into an overdraft or exceeding an overdraft limit, they will assume any additional payment is going to make things very tight. If however they can see a monthly standing order or payment to a saving account, then they know on a monthly basis you can quite comfortably afford a new monthly payment.
So, getting your finances in place, looking at your bank statements, showing the banks that you have a compacity to save will greatly improve your chances of success.
I think a lot of borrowers underestimate the level of disclosure involved in obtaining a French mortgage when making enquires and completing application forms very much try to simplify their scenario here in the UK or simply don’t realise all the information is relevant. My top tip would be to be as clear and transparent and open with the bank or broker you are dealing with to give them the full picture. The banks in France are extremely nervous about people hiding information or not giving them certain information so are extremely forensic in the level of information they require from a borrower. We often find clients are often surprised by the level of information required by French banks in comparison to UK banks. It is also important for borrowers to understand that very recently there has been new regulation that anyone arranging a mortgage in the UK for buyers looking for a property in France are now coming under the FCA which is only a good thing for borrowers because it means that the practice that they used to obtain a mortgage is being standardised across the French market and hopefully making the language and terminology as familiar as possible.
Using a broker can improve your chances of success with a French mortgage application. The first thing to look for is make sure that they are FCA regulated and have the C MAP qualification that is recognised in the UK. A broker can improve your chances of success just like in the UK as they know the market and work with several lenders to be able to give you a great choice of products. Just as importantly they understand the criteria of the French banks.
Most of our clients haven’t purchased a property in France before. They have generally purchased a property in the UK and feel very familiar with that but not in a French environment, especially if they don’t speak the language. A broker can talk you through the whole process, hold your hand and let you know what to expect. More importantly, foresee any challenges and make sure they are overcome. They will have a good relationship with the lenders and are able to show you which banks are going to be most suitable and which bank you have the greatest chance of success with unlike here in the UK, where anyone can be pretty much confident that they will get a mortgage of some sort. In France isn’t like that at all, it is much harder to get a mortgage so its really important a broker looks at your profile and very quickly tells you if you are or are not going be successful and you don’t run a risk of making an application with a lender that goes on for months and months without knowing whether or not you are going to get a mortgage. A broker within a few minutes of doing a detailed fact find should easily be able to tell you what your options are.