Mortgage Update – Current Frequently Asked Questions
This week we take a look at some of the most commonly-asked questions from international buyers looking to take out a mortgage in France. These are genuine questions posed by our readers over the last few weeks. If you have any questions yourself and would like to get in touch, don’t hesitate to drop us a line – [email protected]
What am I likely to be able to borrow from a French lender?
Lending criteria for non-resident borrowers tend to be more stringent than for domestic borrowers. Indeed, a domestic French resident looking to move within France can easily obtain a 100% mortgage.
When most lenders still entertain 70 to 80% max LTV, subject to property appraisal conducted at the underwriter’s discretion, some of them have excluded self-employed clients, deemed “too risky”.
It is also fair to say that because of the complexity and perceived risk of lending to US citizens or taxpayers, we are seeing the LTV for US borrowers around 60% on average.
What is the minimum amount I can borrow?
Bearing in mind the LTVs mentioned above, the minimum loan amount for UK/EU citizens is approximately €100k, and for US borrowers around €150k. In both cases these minimum amounts be higher if the borrower is perceived to be a higher risk, i.e. self-employed.
If you are looking to finance your property and require less than €100k, a French mortgage with French lender will not be for you as a non-resident/international buyer. You would be advised to seek finance solutions in your home country and come to France as a cash buyer instead.
Read our full article on the minimum loan requirements here.
Has COVID-19 had an impact on valuations or property prices?
According to David Carbuccia of Ambassador International Mortgages, “Owing to a high demand, valuations are still holding up in the French residential real estate market.”
Has COVID-19 or the Lockdown impacted how long it takes to get a mortgage approved?
Obviously the French banking system ground to a halt much like the rest of Europe during March and April, which had an impact on those mortgages in the pipeline.
“Most banks are not exactly “back to normal” in terms of timeframes,” says David Carbuccia. “For example, one of my lending partners recently notified me of a one-month delay in processing my files because of a huge backlog over the summer. Consequently, we could be looking at approximately 3 to 4-month timeline from initial enquiry to release of funds.”
This timeframe has been particularly relevant for those British buyers looking to complete on their property purchase before the end of 2020, and anyone with a purchase ongoing should stay on top of – or ensure their agent is on top of – their mortgage broker or lender.
Can I release equity on my French property?
Yes, it is possible in France but far more restrictive than in other countries, like the UK. Equity can potentially be released from a property in France for one of two reasons, either (1) to invest in another property or (2) to carry out renovation or improvement works on that property. It is not possible to release equity to live off, supplement pension, pay for a wedding etc.
There is usually a minimum loan amount required for equity release – typically €200k – and as always the borrower must be able to show sufficient income to make the repayments.
It would not be a suitable vehicle for releasing, say, €20k to €50k from a property valued at €150k.
Read our full article on Equity Release in France here.
Can I obtain a mortgage for a mobile home valued at around €150k on a holiday park?
No, this will not be possible in France; there are currently no lenders who will finance such a project.
Can I obtain a mortgage for a houseboat on the Loire valued at around €300k?
Unfortunately not, similarly to park homes there are currently no lenders who could finance this.
As a non-resident/foreign buyer, can I obtain a mortgage over the age of 60?
Although 60 isn’t considered ‘old’ anymore – with many people continuing to work well into their 70s, there are some extra considerations when looking to get finance in France. Simply put, it is harder and more expensive to get finance at the age of 65 than 55. Read our article in full here on this subject.
As a non-resident/foreign buyer, can I obtain a mortgage over the age of 70?
Unless you are wealthy enough to put down a sizeable chunk as an investment with the lender – and even then it may be very doubtful – the answer will almost certainly be no.
If you have any questions of your own about French mortgages and would like to put them to our experts, please do not hesitate to get in touch?
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