Property Advisor Alistair Lockhart advises prospective buyers on the best way to secure a mortgage and get their finances in order.
There are many things to consider when borrowing in France for your house purchase. Age and income are among the key factors at play, says Alistair Lockhart .
Q1: Who can take advantage of low eurozone interest rates?
I am age 67 and receive a modest annual UK pension income. Will I be able to take advantage of low eurozone interest rates?
At 67 you’re not too old but most lenders in France will only loan until the eldest named borrower is 75, so as it stands you would only be entitled to an 8-year loan at the absolute maximum. This might make repayments higher than you are expecting. Furthermore, for borrowers aged 60 or over, there are additional insurance premiums to factor into the overall cost.
Q2: What is the minimum income requirement to borrow in France for British citizens?
Is there a minimum income requirement for British citizens to be able to borrow in France?
Officially, no, but in practical terms, yes. Generally, French lending sources will only lend a minimum of €100k to non-residents. With a loan-to-value for British borrowers of around 75% to 80%, we normally guide buyers they should be looking at properties of a minimum value of circa €120k-€130k for a lender to be interested in their application.
In our experience, to successfully borrow the minimum €100k, lenders like to see a comfortable, evidenced household income of around €40k-€50k plus a degree of liquidity (a safety buffer) in savings, cash ISAs etc.
Q3: Has Brexit affected mortgage terms for British buyers?
I have heard that as a UK citizen and the fact that we are no longer in the EU means we would need a larger deposit for a property if we were taking out a mortgage. Can you confirm?
No, this is not the case. British borrowers will be expected to put down a 20%-25% deposit for a property, and this has not increased following Brexit. Mortgage terms are no more punitive for British buyers than they were before 31 December 2020, other than the effect of the general tightening market conditions of Brexit and Covid-19.
Q4: Can you borrow in France as a US citizen?
How difficult is it to borrow in France as a US citizen?
It is certainly possible, if challenging. Whether lenders/ brokers will be able to help US clients depends on the quality and merits of each file (ie. the client’s overall personal financial profile and property valuation).
The market is very tight now, and lending to US buyers is even tighter. FACTA legislation and risk for French lenders was an issue pre-Covid. With the market now as it is, we are seeing a very difficult market for lending to US citizens/taxpayers. Loan to values are currently running at around 60% for US borrowers.
If you don’t have a reasonable income then it is highly unlikely you would be eligible. We are typically seeing that if there isn’t an evidenced minimum household income of $100k USD then banks will be reluctant to make an offer.
Q5: Will the type of property be taken into account when borrowing in France?
I understand that in France lenders will place a lot of weight on the property I am intending to buy, and not just my income. Is that correct?
The type of property you are looking to buy – the geography, condition, likelihood of resale etc. – are all factors taken into consideration. Much more so when compared to other countries’ lending criteria.
When it comes to overseas borrowers, lenders are more comfortable with newer properties or places in Paris, the Alps, on the Ce d’Azur, for example.
Rural properties are feasible, depending upon location/condition – but a rundown châteaux in the middle of nowhere is unlikely to be funded as it poses too much risk for the lender when combined with an international borrower.
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