Certain criteria must always be met in order for a buyer when securing a French mortgage with a French lender. For example, when taking into account the future French mortgage payment, all contractual outgoings must not exceed one third of a borrower’s monthly income. Mortgage applicants will obviously either fit into this criteria or not, but that is not to say that there are not other aspects to the application over which the buyer has more control.
Give Yourself the Best Chance
So, what steps can you take to give yourself the best possible chance of successfully obtaining a French mortgage?
The answer to this question largely rests in how you manage your bank accounts. As part of the application, all French lenders will ask to see three full months of statements for each account that you hold. They will want to see that you are in complete control of your finances, and that you are ideally adding to your savings on a monthly basis. Overdraft facilities are not commonplace in France, and banks will take a dim view of applicants who regularly dip into an overdraft or, worse still, who have exceeded an overdraft limit.
Credit card payments do not typically form the basis of the affordability calculations carried out by French lenders. You should, however, aim to reduce your credit card debt as much as possible before commencing the application. Outstanding card balances may be considered to be an indication that you are living beyond your financial means.
The ideal scenario for the lender is therefore that the buyer is not overly indebted already and, month after month, can be seen to put aside money. This creates the reassuring impression that there is space for another outgoing alongside the applicant’s existing commitments.
Lenders will almost always demand a 15% or 20% deposit for purchases financed by a mortgage, and buyers will also have to pay for the notary fees out of their own funds. More and more, however, just being able to prove that these funds are available is proving insufficient. In the current lending climate, credit departments need to see evidence of savings over and above the bare minimum. This is essential in reassuring the lenders that you will be able to cope with the ongoing financial demands of maintaining a new property.
Some of you may also be fortunate enough to have access to donated funds for your purchase, be it from a family member or friend. Caution should again be advised in this scenario. More and more, the lenders will require the buyer to be contributing at least some of their own funds to the purchase. It is no longer the case that a complete absence of savings can be made up for by a sizable donation to the buyer’s benefit.
With regards to the property being purchased, the lenders will invariably carry out their own valuation to confirm that it is a sufficient security against which to guarantee the loan amount. It has unfortunately become increasingly common for properties to be ‘down valued’ and for lenders to refuse the financing on these grounds. If you are taking out a mortgage for your purchase, it is best to avoid properties which are particularly isolated in rural areas. Although these often represent the best bargains for your purchase, the lenders may worry that they will be difficult to sell on if they ever needed to be repossessed.
The most important thing to bear in mind is that all French mortgage banks employ very different criteria when it comes to assessing a mortgage application. Just because you are not able to secure a mortgage with one French lender, it doesn’t necessarily mean that will be the case across the board.
Using the services of a good independent French mortgage broker will ensure that you have access to the most competitive products available, and that your application will be placed with the most suitable lender for your particular situation. Furthermore a good broker will often have access to French mortgages with discounted rates and fees that are lower than those available if you approach the lenders directly providing potential savings as well!
Please click on the following link if you’d like more information on how to Apply for a French Mortgage