French banks have, for many years, been happy to extend credit facilities to overseas buyers of French property. As a general rule of thumb these will typically following the same vetting standards and income-to-debt ratio calculations as with a domestic buyer.
That said, as the majority of the buyer’s income and assets will (likely) be in another country, the risks are greater for the bank than with a French resident. Additional requirements may therefore apply, so if you want to borrow in France, in Euros, there will be a few more hoops to jump through (or they might be the same hoops, they are just a little bit higher!)
Also, in the current economic uncertainty after the pandemic, it is inevitable that there will be a tightening on borrowing by the banks. We’re already seeing this with some lenders.
Contrary to how banks might work in the UK, for example, it is common for French mortgage providers to ask non-residents to open an investment or savings account and make a deposit. This might be equivalent to 12-24 mortgage payments. This is the key to the door to a better rate with the bank, and also gets your relationship off on a strong footing. This is something of an alien concept for many foreign buyers; you might expect a private bank to work this way, but not mainstream retail lenders.
You will also need to consider life insurance to cover the sum borrowed. This is a legal requirement and must be equivalent to 120% of the mortgage amount. The lender will, in most cases, need to be named as the beneficiary.
Some banks/lenders may require additional reassurance with health and disability insurance policies. For borrowers aged over 50, or where the sum being borrowed is over €150,000, there may also be a requirement for a medical exam.
With regard to the property, obviously a realistic valuation will be sought-after by lender, as well as proof of insurance.
Requirements for getting a French mortgage
You should begin to pull together all of the following paperwork for all applicants. Obviously this will all be sent digitally, so you will need screenshots, scans or good quality photos.
- Copy of passports(s)
- Evidence of income – payslips (if salaried) and self-employed individuals will need to be able to provide a set of audited financials/end-of-year accounts
- Net worth statements from accountant/financial adviser (if appropriate)
- Bank statements for the last 3 months which evidences your income and outgoings
- Current rental agreement (if appropriate)
- Copy of the compromis or promesse de vente (for the actual mortgage offer, not for an agreement in principle)
- If the property is new or requires renovations, you will need to provide written estimates or invoices from a French-registered artisan (and copies of their insurance)
If you have any questions about the French mortgage process, or would like to find out if you are eligible for a mortgage in France, get in touch: [email protected]
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