Many foreigners don’t realise it is possible to get a French mortgage
If you’re wondering whether you can get financing in France for your property, the answer is a straightforward yes, and no strings attached. Too often, foreigners don’t realise that they can get financing from French banks – and this can often be worth considering, especially when interest rates are lower in France than in their home country.
In France, all banks and loan companies follow the same rules, with financing based on your capacity to borrow in terms of income (capacité d’emprunt). Other assets can add to your credibility but are by no means the only basis for a loan. French banks or loan companies allow you to make repayments of up to 30% of your monthly income, net of social charges and before income tax. In the 30%, they include rent and other loans you have. Usually, loans are offered for a maximum of 15 years, although some banks allow up to 20 years, and, very exceptionally, 25 years.
Most banks require a 20% deposit, although some banks may finance 100% of the property. Notaire fees (setting up fees, state taxes etc) are not financed by the bank, so you must set aside approximately 7% to pay for these. If you are salaried, you must be beyond your trial period. For independents, you need two to three years of track record, and getting a loan is more difficult.
Whether you are a resident or non-resident, ask for a branch specialised in dealing with foreigners. Most establishments have one and it makes life easier, as their staff will be more experienced in dealing with foreigners and are generally English-speaking.
It’s worth knowing that banks and loan companies do make a distinction between buying property as a primary residence, rental property or holiday home. Primary residence is where bankers are most flexible as that is where you are most likely to repay. Rental property is considered more risky from a banker’s point of view, because your tenant may not pay. In general, they take into account 70% of your future rental income when studying your loan application. Holiday homes are what bankers like least, especially if you are a non-resident. However, in most cases where the 30% capacity to borrow condition is met, you get your loan.
Whatever the circumstances, it is a good idea to look at the financing before even looking at properties, as this will give you a realistic budget to work on. Also, you’ll need to put the details of your financing in the binding document between the buyer and the seller called the “promesse de vente”.
If you are taking out a loan, make sure the paragraph concerning the “condition suspensive” is filled in. In short, you are buying on the condition you get the loan, and you have to specify details of the loan – amount, duration and rate – and it is important that this be absolutely accurate. If under these conditions, your loan application is turned down, you get your 10% down-payment back.