MORTGAGE FAQ’S
When buying French property there are any number of issues you need to be aware of. Over the years we have built up considerable expertise in this area. This section deals with the top FAQs clients ask us most often. Whether you are buying now or not, if you want us to expand on any of the answers given here, then please contact us - we are always very pleased to help.
Q 1. How much can I borrow and how is it worked
out?
A. The most common affordability criteria used is
that, at the time of your mortgage application, the new proposed French
mortgage monthly payments plus all / any existing financial commitments,
such as any existing mortgage payments, rent payments, loan repayments
etc must not exceed 33% of your total Gross monthly income. This figure
can be increased under certain circumstances to 45%.
Please remember that the overall amount you can borrow is also partly
related to your available deposit funds. If you are not already resident
and taxed in France itself at the time of the application, you must
normally be able to put down a minimum of 20% of the purchase price
or 15% for cases where you intend borrowing above 75,000 euro. For clients’
resident and taxed in France itself at the time of their application,
lower deposit levels are required than for Non resident borrowers. In
fact, mortgages of up to 100% are available.
In addition, you will need to have available the Notaries' fees (buying
costs), which can range between 8-10% of the purchase price.
Q 2. How long does it take to get a mortgage arranged?
A. Typically, it takes around 4-6 weeks for a mortgage
offer although we can often obtain a decision or indication based on
the financial aspects of your application within a few days of the lender
receiving your application from us.
As a general point, the better the quality and accuracy of the initial
case submission, the quicker it will be processed by a lender. We put
considerable efforts into this aspect and have a huge amount of experience:
before you apply for a mortgage, we will have fully briefed you on all
the items required in conjunction with your mortgage application - so
you can plan ahead and gather together exactly what you need in good
time.
Q 3. How many people can apply on a mortgage application?
A. Normally, and subject to each applicants' own satisfactory past credit history and status, up to four unrelated applicants can apply together. If there are to be more than four applicants, then they would need normally need to be related or else "very closely connected" to a lenders' satisfaction.
Q 4. Can a non-earning partner or spouse join in a joint application?
A. Yes, assuming the non-earner has not had any serious past credit problems they can join in a mortgage application with an earning spouse or partner.
Q 5. How do you get paid for your service?
A. We charge a non refundable Mortgage Application Fee of £349/€495 for each application submitted to the bank and receive commission from the lender upon completion.
Q 6. How many lenders do you deal with?
A. We currently deal with eight lenders in total, although the majority of our mortgage business (80%+) is placed with six lenders in France, mainly for reasons which include the quality of service and staff, flexibility, ability to deal electronically with case feedback or issues arising, good brand and name awareness and speed of processing.
Q 9. Do we need to meet you?
A. No.... everything can normally be done by post, phone, fax and e-mail. In fact, it is very rare for us to meet clients unless it is at a French property exhibition. If you feel you really would like to meet up, this could be possible but you would need to discuss this with us first.
Q 10. If you refer us to other advisers, do you get anything for that?
A. No - and it is not our policy to seek any direct rewards for referrals to third party firms, including from solicitors, estate agents etc. We also refuse any such offers on principle - as we are proud of our complete independence. We do not charge fees to firms appearing on our Links page nor have any direct involvements or shareholdings etc in any firms listed there. Equally, no firm or individual is listed there if any adverse information comes to light from any International Mortgages Direct client using their particular services.
Q 11. Can I let out my property in France?
A. Yes, letting out the property for short term holiday lets, several weeks at a time is fine with all our panel lenders. If you wish to let out for long periods with a formal tenancy agreement, you will need to ask the lenders permission before creating any long term tenancy. You will need to check your buildings and contents insurance covers you during any third party occupation of the property, including short term lettings.
Q 12. What about Life Insurance ?
A. In France, Life Insurance is a mandatory requirement to go with any mortgage - so that the mortgage would be repaid in the event of death within the mortgage term. If you have suitable existing policies, some types of cover can be used to cover the mortgage - but not Endowment policies or Whole of Life plans (for various technical reasons). Acceptable forms of life cover are Level or Decreasing Term Assurance (provided the insurer is on the approved list of the lender) - which would also need to meet the lender's lending criteria for the Sum Assured and the term of the plan and the parties insured. The lender will require full assignment of the policy. International Mortgages Direct are able to arrange suitable and cost effective cover, either with UK or International insurers or by arranging cover via the lenders' own block policy arrangements (where applicable).
Q 13. What about currency risks?
A. International Mortgages Direct takes the worry out of the process. Through our partnership with a leading currency broker we will develop a thorough understanding of your individual circumstances. We then help you identify how best to achieve your objectives and protect yourself from adverse movements in the exchange rate. Finally, when the transaction is undertaken we provide you with a better exchange rate than your bank. For more information, please click on the link,
Q 14. Does location / region affect the mortgage I can
obtain?
A. Yes, it can do - with some (but not all) lenders! This may be relevant if you require a relatively high proportion of the purchase price on a mortgage (say above 70% of the purchase price in some rural areas/regions).
Q 15. Are 'Leaseback' properties acceptable?
A. As a general point, leaseback (residence du tourisme scheme) type purchases, where you propose to enter into the granting a long term lease in favour of a developer may be acceptable in certain cases, which are broadly speaking where the Developer is well known and has a track record, and the property development is in certain regions of relatively high domestic demand and the clients' financial profile is considered relatively low risk.
Q 16. Do I need a solicitor / lawyer?
A. There is no strict requirement to appoint a specialist solicitor or lawyer . However, you need to bear in mind that most French Notaires do not normally give advice as such - they are simply there to ensure the transaction proceeds according to French Law. This is not the same thing as ensuring the transaction proceeds in your "best interests" as such, or to explain things in detail to you. Many Notaires do not speak English, so the potential for misunderstandings is always there in those cases.
Q 17. What about having a Survey carried out?
A. In France, French buyers don't normally instruct a surveyor to look at the property. Some lenders will commission a brief Valuation Report - but this would be for their own lending purposes only and you would not normally receive a copy of it. Instead, the norm in France is for French buyers to have the property looked at by local builders or specialist contractors, depending on what seems appropriate.
Q 18. How do I actually pay my French mortgage?
A. Normally you will need to set up a French bank account and pay the mortgage with the French equivalent of a "Direct Debit" (which is called a "Autorisation de Prelevement Automatique" in France) - you will also need a French bank account to pay for various items of housing related expenditure -such as local (community) tax, utilities etc.
Q 20. What is "EURIBOR"... ?
A. EURIBOR stands for the Euro Inter Bank Offered Rate. This is quite simply the interest rate at which European banks can borrow money (from each other) over a set period, for example over 3 months. There are several other EURIBOR indices for other time frames - including 6 month and 12 month EURIBOR.
