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Financing your property in France…Finding a mortgage in France to suit your needs is a fairly straightforward process. Mortgage lenders such as HBSC, UCB (formerly Abbey National) and Barclays, plus a host of other French banks, offer flexible loans of up to 85% of the property value, often for up to 25 or 30 years. In addition, banks in France can often lend for renovation work on the property. We also have links with mortgage brokers who can advise and help in the selection of banks and mortgages and offer a ‘hand holding’ service through the process. The European wide Spectrum IFA Group is a financial services company who have assisted many Totally Property Group clients over the last 5 years.
Please read on to find out what you need to provide to get a mortgage, plus a few facts and figures about borrowing to buy in France.
What paperwork is required? Click here to download a PDF document
French Mortgages – the facts - How much can I borrow and in what way?
residents may be able to borrow up to 85% of the property purchase
value, depending on their nationality. Non EU residents may only be
able to borrow up to 75%. The loans can be for up to 30 years,
depending on age and bank chosen. As the buyer you need to fund the
deposit (minimum 15%) plus the notary costs (approximately 8%).
6.3% in government taxes (like stamp duty)
Plus 1% in notary administration fees
Plus approximately 1% of the mortgage amount assignment fee if you are taking a mortgage to assign the bank’s legal interest in the property.
Interest only mortgagesHugely popular in the UK and US, interest only deals are becoming more available in France if you want to reduce the monthly repayment to a minimum. There are however differences with the products in other countries:
ASSURANCE VIE LINKED (In Finé): With this loan instead of placing your deposit into the property you take a 100% Interest Only loan and are obliged to place the deposit (minimum of 20%) into a French investment scheme which runs along side the mortgage. These schemes can have significant inheritance planning advantages and can offer flexibility if you are going to buy and sell a lot of properties as they can be kept as the deposit for the next purchase. We can give you the details of a qualified and regulated 'courtier d'assurance' in France who can assist with the mortgage and broker these for you should you wish to discuss this option.
DUAL PHASE: Some banks also offer a product which is Interest Only for 5 or 10 years and then becomes a repayment loan for 10 to 25years. This is particularly useful if you believe you will pay off large sums in the first period.
ASSET BACKED: One bank now offers an 80% Interest Only product which does not require a deposit into an investment scheme and does not have a second repayment phase. You simply need to provide evidence of your other net assets up to a value of between 120% and 150% of the loan amount. This is a very good and popular product especially to those who own other properties.
These products are now available with fixed rate periods or 3months, 1 year, 2 years, 5 years or 10 years.
Buy to let mortgages
Many people ask if
they can buy on a buy to let basis, and the short answer is no. Future
rent can be taken into account but the bank will normally devalue the
property by 10% and then lend 85% of the 90% valuation, meaning a
larger deposit is needed. The bank will also only take 80% of possible
'long term, unfurnished' rental income into account, which is
considerably less than what you will probably achieve through seasonal
Affordability – the ‘debt ratio’
There are no ‘self certification’ loans and there are no non-doc (“sub prime”) loans in France. You need to prove that you are receiving a regular income and that it covers all of your debts three times over. These strict Banque de France lending laws state that you are allowed to be up to 1/3 'in debt'. So if you earn €3,000 per month as a salary then your mortgages (including the new one), credit cards, loans and other debt repayments cannot come to more than €1,000 per month.EXAMPLE
Purchase price €300 000
Minimum deposit of 15% €45 000
Notary fees (approx 8%) €24 000 total cash needed €69 000
Mortgage €255 000
The repayment mortgage for this over 25 years at 5% would cost €1490 per month, plus approximately €80pm life insurance. This would mean that you would need to prove an income, after all other debts, of €4500pm or approximately €54,000p.a. Depending upon which bank you approach will depend upon this figure being your Net or Gross figure.
The interest only repayments on this loan would be €1060pm.
The Spectrum IFA Group - Mortgages and Financial AdviceThe Totally Property group has been working closely with The Spectrum IFA Group for the last five years to help our clients find the best financing solutions for their property purchase. Their combination of expert knowledge, approachable advice and professionalism has helped many of our clients (and staff) find great mortgages specific to their situation.
The Spectrum IFA Group is a pan European financial advisory brokerage who concentrate on assisting English speaking expatriates and non-residents with all aspects of financial planning. They are proud of their philosophy of acquiring Regulatory Registration in each of the countries that they work in. This means that their clients know that they are dealing with a serious, legitimate business who is here to stay and who wish to build a reputation for excellent advice and customer care, qualities that we appreciate and share.
Through their own skills and knowledge base or through their network of experts The Spectrum IFA Group will help you with all of the following:
• French Mortgage advice
• French and International Tax planning
• The legal structure of property ownership, if appropriate.
• French and International banking, savings and investment.
• Inheritance & Wealth tax mitigation and planning.
• French and International retirement planning.
• Portfolio Management and Monitoring.
• Wealth Management
We recommend that your first point of contact is with Peter Brooke of the Spectrum IFA Group Cote D’Azur office. He has an in-depth knowledge of the French mortgage market and can provide you with a no obligation and no cost consultation by email, telephone or face to face to help you evaluate the affordability and suitability of your potential mortgage.
Peter will take you through the qualification rules of applying for a loan in France and can even give you a very good idea as to which bank will be best for you and how much your monthly repayment will be. As there are no ‘mortgage in principle agreements’ in France then this element of his service is invaluable.
If you are not considering getting a mortgage it still might be a good idea to discuss your project with Peter as he will be able to advise you on the legalities and tax implications of property ownership.
Peters contact details are
French Mobile: +33 (0)6 87 13 68 71
French Tel: +33 (0)4 93 00 01 13
French Fax: +33 (0)4 93 00 01 14
Post: The Spectrum Group, Mediathel, Routes des Cretes, 06560 Valbonne, France
Cote D’Azur – Paris – Provence - Bordeaux – Toulouse – Grenoble
Barcelona – Madrid – Costa Blanca – Costa Brava – Costa del Sol - Algarve
Luxembourg – Amsterdam
TSG Insurance Services S.A.R.L. Siège Social: 34 Bd des Italiens, 75009 Paris « Société de Courtage d'assurances » R.C.S. Paris B 447 609 108 (2003B04384) Numéro d'immatriculation 07 025 332 - www.orias.fr
« Peter Brooke » numéro d'immatriculation 07 032 480