Raising Finance in France

Loan to Values

Standard loan to values in France are up to 80% and are always linked to the valuation of the property, not the purchase price.

Most French mortgages whilst linked to a percentage of valuation cannot exceed the price declared on the title deed.

French Mortgage Product Ranges

Finance in France is predominately linked to a variable rate and on a repayment basis. French variable rate products are generally linked to the variable Euribor (European Inter Bank Offered Rate) and your interest rate can be reviewed monthly, quarterly, half yearly or annually. This can differ from product to product.

IMS has access through banks in France to Interest only mortgages, fixed rate mortgages and also a flexible "Credit Line" product.

Equity Release and Re-mortgaging in France

This process can be undertaken, but only through specialist lenders. Because of the legal process of securing a loan in France it is more difficult and costly to make any changes to your French mortgage post completion. Raising funds against an unencumbered French property, releasing further funds, or changing the terms will incur further costs.

In France under the current legislation it is advisable to raise the maximum funding you require for your current and future needs, as any changes at a later date may not be possible and will be costly. Lender, product and rates need to be carefully selected to ensure they are the most suitable for your needs. Lender and product hopping which is now standard practice in the UK is not currently feasible in France.

Term

French mortgage terms usually range from 6 to 25 years and are dependant on age and the finance provider selected. Most French banks will look for the mortgage to be completed by age 70 although IMS have lenders who will look to extend this to age 80.

Costs

Most banks in France charge an arrangement fee for dealing with your mortgage in France. French bank opening fees are not payable up front and do not apply if you decide not to take up their offer of lending. All other costs in relation to the French mortgage deed including Notary fees and "Land registry" costs are deducted from your gross mortgage advance. It is important to check you have accurately assessed and accounted for all expenses to ensure you are not left short of funds for completion day. We would suggest you allow at least 9% of the purchase price to cover your purchase and finance costs in France in full and that you make sure you are made fully aware of the provision of costs for completion.

Currency

If you take a French mortgage with a French bank the capital provided and repayments will be in euros.

Underwriting Criteria

Mortgages in France are only granted on a full status basis. It is unwise to allow yourself to be talked into submitting false documentation and you should avoid brokers who offer this service. A fraudulent application could put your French property and your deposits at risk if found to be so at a later date. In general, French banks will assess your income net of tax and will want to see that the combined existing UK and new French monthly liabilities do not exceed 33% of your proven monthly net income. When assessing your application, it is possible that certain banks will take into account a level of projected income generated if you are purchasing a Buy to Let or Leaseback property, but note that lending will not be based exclusively on this.

Benefits of Raising Finance in France

Competitive interest rates, and protection of your assets in the UK are some of the key benefits of borrowing in France, all alternatives should however be understood and considered before making a final decision.

Standard Non Resident Document Requirements for French Mortgages

Employed Applicants

Last 3 months payslips

Last 2 P60 �s

Last 3 months bank statements

Last annual statement for all current mortgages, loans etc

Copy of Passport

Self Employed

Last 2 years Self assessment tax return

Accountants reference confirming net profit for the last 2 years

3 months bank statements

Copy of passport

Some banks in France providing French finance may require you to supply your credit file from the UK or may check your credit file direct. Any loans subsequently granted will not be registered on your credit file in the UK.