The French mortgage application process
1 – OVERVIEW AND COMMON ADVICES
Contrary to common belief, getting a mortgage in France is relatively simple. The only thing that can surprise some property buyers is the amount of documentation required to complete the application process. With the assistance of an experienced French mortgage broker, you can use their knowledge and connections to achieve a smooth and positive result. You may need to travel to France to open a bank account at the branch. We can assist you during the meeting with the bank.
It is advisable to check your affordability as early as possible, as this will help you target the right properties. It also means that we can find the right bank for you as quickly as we can.
Each of the French banks has slightly different underwriting criteria and so requires a slightly different set of supporting documents. Some banks may also require documents to be certified by a finance or legal professional. The banks will require a full set of documents to process a mortgage application. We’ve listed everything you’ll need here and we advise you to make a start on gathering them as soon as possible.
It is worth considering at the outset if you will hold the property in your own name or purchase via a company structure. French banks will lend to Societe Cilvile Immobilieres (SCIs) and SARLs (two types of French companies) if they are composed of close family members (parents/children buying together, siblings too – but not cousins or friends). A discussion of relevant tax implications can be found in the French tax section. French banks do not lend to UK companies nor can a UK company be a shareholder for an SARL de Famille, according to our research.
2 – WHAT ARE THE STEPS?
Step 1 : Decision in principle
Find out your affordability profile and decide on the most suitable mortgage option.
Step 2 : Build your application
Collect the paperwork required to complete your mortgage request
Step 3 : Approval process starts
We leverage the best possible deal through our connections with French underwriters.
Step 4 : Life insurance & bank account
A must-have for all French mortgages. We can assist you in finding a suitable solution.
Step 5 : The offer
You receive, complete & sign the paperwork, after which a 10 day cooling off period starts.
Step 6 : Completion
We follow up with the bank and the French Notaire to organise a completion date.
3 – REQUIRED DOCUMENTS
The documents required to support a French mortgage application are as follows:
- Last 3 months bank statements, for each borrower, for ALL accounts.
- If you are not a home owner you must provide your rental agreement and proof of the rent you pay.
- If you pay council tax, please provide the statement or invoice.
- Proof of any extra income. You will need to provide tax returns showing rental income, pensions and dividends.
- Proof of the origin of your personal contribution to the mortgage (savings account, bonds etc)
- Copies of all borrowers’ passports
- Copy of marriage certificate if applicable
- Copy of divorce agreement if applicable
- Proof of home address (utility bills, council tax, etc)
Employment details and documentation
- Last 3 months pay slips
- Last 2 P60’s or tax returns
- The last 3 years accounts for the company
- Last 2 years personal tax returns
- Certified accountant’s letter stating income for last 2 years
Mortgage application form
- Mortgage application form
- Life insurance questionnaire (may be sent to you by post at a later date)
- French bank account application form
Download application form
- Purchase contract
- Company set up documents as applicable. KBIS, Statutes etc.
4 – SELECTING THE BANK AND THE OFFER
Usually the bank you select will be the one offering the best conditions and rates to suit your project. These days it may be a branch local to the property, though we do still use some branches with national coverage. We work with two main types of banks to find mortgages and loans for properties in France: local French retail banks and international private banks.
Repayment mortgages are generally more expensive as you have to pay the interest on the loan amount and also pay off a portion of the capital each month. Of course, with French mortgage rates so low at the moment, the long-term value can be substantial, especially when compared to rates of other European countries. Repayment mortgages are often called ‘capital and interest’ mortgages and the payment for €100,000 may be, say, €7,200 per year – almost double the cost of an interest-only mortgage. Repayment mortgages are best used for main residences or for investments, such as leasebacks, where the aim is to pay the mortgage off and/or enjoy the income. Repayment mortgages (prêt amortissables) are the most common mortgages in France and offer the most protection.
With an interest only mortgage (prêt infiné), as the name suggests you only pay the interest on the amount you borrow. If you borrow €100,000 at a 2.5% interest rate you will have to pay €2500 per year. After 20 years you will still owe the €100,000 and have to sell the property or find funds from elsewhere to pay back the money you have borrowed. Hopefully the property you bought will be appreciated in the meantime so you will have made a profit whilst keeping your costs down. Interest only mortgages are the mortgage of choice for investors looking to make a return by selling the property for more than the purchase price.