French Mortgage FAQ
Our French mortgage FAQ covers the most frequently asked questions since 2005 when we opened for business.
What types of mortgages are there in France?
The majority of mortgages are capital repayment mortgages. Interest rates are either fixed or tracker, some with a cap on future revisions. Some interest only mortgages are available in France. French interest only mortgages are subject to asset based eligibility criteria (prior wealth test).
Is Rent to Buy possible in France?
Rent to Buy is possible in France, but it is quite still unusual. Though Rent to Buy is not common we are seeing an increase in Rent to Buy financing for specific types of property that the French banks prefer not to finance:
- Business premises.
- Home business property where the owner’s income will be generated solely by the business.
- Properties in low liquidity areas where a bank’s valuation team don’t feel able to value a property.
- Low priced property below the minimum mortgage amount set by the banks.
Rent to Buy can also be attractive to vendors seeking to spread their capital gains liability over a number of years and so stay below the annual capital gains tax relief threshold.
Complete our online form to find out more about Rent to Buy in France.
What loan to value is available on French mortgages?
For non resident borrowers mortgages up to 85% of the property value are available. For French residents up to 100% of the valuation is available (French resident means you are already a fiscal resident in France with income received and taxed in France). Property value is determined by the bank according to local market liquidity. In some cases the bank valuation is lower than the price. Borrowers able to put down at least 20% deposit will have the widest selection of French mortgages.
What interest rates are used for French mortgages?
French mortgages are based on Euribor (EURIBOR = Euro Inter Bank Offered Rate). The index rate may be Euribor 1 Month, 3 Month, 6 Month or 12 Month. Euribor rates are listed here: http://www.euribor.org
Fixed rates are fixed for the duration of the mortgage with identical monthly payments. Tracker rates consist of a base index plus constant margin.
How long does it take to obtain a French mortgage?
For non resident purchasers we recommend 60 days from signing the Compromis de vente to receiving the formal paper offer.
We can fast track urgent applications providing the application is complete at submission.
Part of the time may be used to add complementary documents, the French examination is very thorough. Insurance cover for large mortgages usually requires medical examinations. Part of the time will be spent by the bank on analysis, approval at several levels, computing the global cost, confirming the valuation.
I don’t live in France yet, can I get a French mortgage?
You don’t have to live in France to qualify for a French mortgage. The property you are buying must be in France. The mortgage approval is based on your current financial situation. We arrange mortgages for globally based customers including UK, Ireland , US, Canada, Australia, Asia and United Arab Emirates.
The French property needs renovation work. Can I get a mortgage for this too?
It is possible to finance renovation works as well as the property purchase with a French mortgage. You will be required to provide signed quotes from a French-registered artisan with the mortgage application. The bank will release the mortgage funds for each stage of the work as it is completed. Like the property the works are subject to the bank’s own valuation of the completed project.
I paid cash for my French property. Can I get a mortgage now?
Post-purchase finance is available within a few months of initial purchase.
Renovations mortgages are available on unencumbered property subject to eligibility.
Equity Release mortgages are available subject to asset based eligibility criteria (global wealth test).
Can I get a French mortgage for Buy to Let and Leaseback Properties?
French banks will finance investment properties, based on the borrower’s own income not the anticipated rental.
French banks will finance some French leaseback developments, major developers only.
Will my credit score help my application?
We do not carry out credit checking or automated credit scoring.
French banks assess each application individually at the time it is made. However, the lender may perform a credit check or other compliance investigations before issuing the final mortgage offer.
I’m self employed, will I qualify?
Three years’ accounts and personal tax returns are required for a 3-year historic average. The only eligible income is income taken out of the company as reported on personal tax returns. Both salary and dividends can be considered.
I live in the United States, can I still get a French mortgage?
US authorities impose reporting regulations on foreign banks. Some banks do not have the IT systems to comply. They have concluded they can no longer lend or open bank accounts for US persons (residents or US$ account holders). We work with banks that lend to US persons.
I don’t need a big mortgage, am I eligible?
The minimum mortgage amount for most French banks is now 100,000 Euros.
How can I find out how much I can borrow?
French banks apply a global debt-to-income ratio maximum 33%. Your French mortgage repayment capacity depends on your eligible income and your prior financial commitments. Your spare repayment capacity determines the maximum mortgage repayment available to you.
If you complete the online mobile friendly form we will explain your eligibility.
Prior financial commitments include main home mortgage payments or rent, other mortgage payments, car lease payments, bank loan repayments, rolled-over credit card balances which are not paid off in full at the end of each month, divorce maintenance, consumer credit installments.
Eligible income includes portions of salary, dividends, rent from investment properties, average bonuses, pensions in payment. All income is corroborated by personal tax returns.
All French mortgage purchases require a personal contribution from you. The personal contribution is needed for the property deposit and transaction fees. In some cases the available personal contribution limits the mortgage amount before the repayment capacity is exhausted.
French banks require a residual income after all financial commitments to cover other household bills depending on household size. The implied residual income can also limit the maximum mortgage amount available.
Can I get a French Mortgage to buy a Gîte or Chambres d’Hôte?
French mortgages are only available for residential properties. Mortgages are not available for gîtes, chambres d’hôte, farms, vineyards, hotels, catteries, fishing lakes or other commercial premises so you should contact us regarding Rent to Buy financing. If there is a letting unit as part of the property it is sometimes possible to arrange mortgage finance so long as this is a secondary activity and a modest part of the property. If you intend to move to France to run the property as a business obtaining your sole income from the activity a mortgage is not the correct solution.
Should I use a French Mortgage or Equity Release on my existing UK mortgage?
This is not a simple question so we have provided a detailed answer on our French Mortgage versus UK Equity Release page.
Can you help me arrange an FX Foreign Currency account?
Most certainly. We have preferential terms with a selection of FX currency brokers and can get you exceptional deals on your FX foreign currency needs, just complete our online FX Quote form.
I will be viewing properties across a wide geographical area, can you suggest the best way to travel?
OK, this is not strictly a mortgage question, but it is a real issue for many clients. France is a big country, bigger than most people think, so the best option in most cases is to use internal flights and the high speed TGV trains to get from one area to another.
Can I get UK Property Insurance for a French Property?
Yes you can. What’s more the UK property insurance market is often a lot more competitive than French property insurance so it is always worth checking the prices for the insurance cover you need before you buy. We can can get you a French property insurance quote if you complete our French property insurance quotation form.
How much do French banks charge to arrange a mortgage?
French banks charge a Frais de Dossier to set up the mortgage, typically 1% of the loan amount reducing for large amounts. We will advise you of their fee, and when it is chargeable, as part of our quote.
Does Olive Tree Mortgages charge a fee?
We may ask you to pay a small administrative fee which will be proportional to the amount of work involved in processing your French mortgage application. Our fee will be clearly detailed in the mortgage quote we send you. This fee will be an administrative fee, not calculated in relation to the amount of your mortgage application.
Do I need French life insurance cover?
French life insurance for the French mortgage is compulsory for both residents and non-residents. The insurance is intended to pay off the remaining mortgage in the event of death.
Some banks waive the requirement for a very low loan-to-value mortgage on a case-by-case basis.
Most banks allow flexibility on the insurance provider, they do not insist on in-house cover.
The banks only require single cover for the loan. Joint borrowers may take pro rata insurance amount according to their income.
Will I need a French bank account?
You will need an onshore French bank account for your mortgage direct debit payments. Some French banks make accounts available to non residents.
Can I increase my monthly payments or make lump sum over payments?
After 12 months you can increase the regular direct debit payment. You can repay minimum 10% of the initial sum borrowed at any time.
I want to pay off my mortgage early. Will I have early redemption penalties?
French fixed rate mortgages have standard French early repayment penalties. Standard ERPs are 6 months’ interest charge or 3% outstanding capital whichever is lower. You can check the monthly interest charge throughout the mortgage on our amortisation report.
Tracker mortgages do not usually have penalties for early repayment.
Do French Mortgages include payment holidays?
Most mortgages allow an arranged break in repayments (although not life insurance). The increased repayments are recalculated at the end of the holiday. The new repayments take account of the rolled-up interest and the shorter term to redemption.
Where is OliveTreeMortgages registered?
OliveTreeMortgages is a trading name of Best French Mortgage Ltd, a UK registered company with the number 04262618.
We cover all of France for mortgages and are registered as a category 1 Mortgage Broker with the FCA under the number 520639.
We are completely independent and able to act as a whole of market mortgage broker.