If you’re a cash buyer then that's great news, you can skip this step. If you're looking for an overseas mortgage then read this guide all about getting a mortgage in France.
Basic Mortgage Facts
- Max 85% loan to value on a repayment basis with max term 25 years
- Max 75% loan to value on interest only basis with max term 15 years
- €100,000 minimum loan
- Fixed rates from 1.50%-2.50% on average
While French property hasn’t been reduced to bargain basement prices, it generally remains well under UK averages, with plenty to choose from within a budget and the current strength of the pound allowing buyers to get more bang for their euro.
In fact, not only does France currently offer UK buyers the widest range of finance options in Europe for overseas property, it also offers the lowest available mortgage rates.
Is it still possible to obtain finance?
There’s no getting away from the fact that French lenders have tightened their mortgage eligibility criteria in recent years, but they’re still willing to lend to UK buyers, especially if they can prove that they have a sound financial profile.
Rates have been at historic lows over the last year and even though they have started to rise gently in 2017, they remain extremely competitive. Fixed rates over periods of up to 20 years are popular as it means there are no nasty rate rises over the lifetime of the mortgage. And the best rates are not limited to those with the biggest deposits. Many of these deals are available for mortgages of up to 80 or 85 per cent loan-to-value.
Should I raise the finance from my UK property or by taking out a French mortgage?
If you have sufficient equity in your UK property, you can certainly choose to take out an additional or new mortgage to buy your overseas property. But you should still seek legal advice as you would be taking a charge and therefore a risk on your UK home.
Taking out a French mortgage is becoming increasingly popular, especially as the market has become more developed and competitive. It also means that the lender will carry out its own legal checks on the property and arrange for a valuation to take place.
Should I go directly to a bank to get the mortgage?
Options for borrowing from a UK-based bank are limited. You can go directly to French lenders, but each one has different criteria and you may not necessarily be offered the most suitable loan, or the best deal available. You may also encounter difficulties with language barriers.
A specialist broker will know the exact mortgage application requirements and can source the best possible deal. They’ll also know of any restrictions and administration requirements, which will save you a lot of time, cost and hassle.
At what stage should I apply for a mortgage - before or after I've found the property I want?
It’s sensible to get the mortgage process started as early as possible, even if you’ve not begun to look at properties. In particular, you need to establish how much you can afford.
An 'Approval in Principle' will tell you exactly how much you can borrow and what price range you can realistically consider when conducting your property search. It will also prove that you’re a serious buyer, could make you better placed to negotiate the price with the vendor.
This is a real positive for International buyers, as French vendors tend to be concerned about foreign purchasers who have no financing in place and know little about the French mortgage process.
Most importantly, you will have the peace of mind of knowing that you can afford the properties that you are visiting and that there will be no nasty surprises later on.