Buying in: Alaigne, South of France.
Property price: €514,000
Mortgage amount: €359,800
Mortgage type: Repayment
Mortgage term: 20 years
Interest rate: 1.75% Fixed
One key element we keep referring to in the transaction of the month series is timing. Buyers tend to widely underestimate how long it takes to arrange a mortgage. If everything lines up, the offer can come in under a month but on average it takes about 3.
Although credit might be agreed quite quickly, it is only half the battle. Once the lender is happy with the borrowers profile, they still need to have all the guarantees in place and set up a life insurance cover if necessary before issuing an offer.
For this young British couple living in Hong Kong, the risk committee gave its approval within 4 weeks. Then the clients instructed an expert to value the property in person and produce a report for the bank. At that point we are already 6 weeks into the process and still have to arrange a life insurance policy to cover the loan in the event of death. Fortunately, medical tests were not required so we got the agreement from the insurance company within 2 weeks. By the time the mortgage offer was received by the clients, the process had lasted about 10 weeks.
It is really important to stress to the vendors when signing the ‘compromis de vente’ that the process for non-residents takes longer than a normal transaction.