FRENCH MORTGAGES

If you’re plan­ning to fi­nance a prop­erty pur­chase in France with a French mort­gage, it’s worth mak­ing sure that your fi­nances are in good order be­fore you start the ap­pli­ca­tion process, as Simon Small­wood ex­plains

Living France - - CONTENTS -

What you need to know about the ap­pli­ca­tion process to en­sure a suc­cess­ful out­come

Pur­chas­ing a prop­erty abroad is not a de­ci­sion to be taken lightly. Bri­tish buy­ers whose dream it is to buy in France of­ten wait pa­tiently for a num­ber of years un­til they feel com­fort­able enough with their own cir­cum­stances and over­all eco­nomic con­di­tions to take the plunge. Given the cur­rent un­cer­tainty sur­round­ing the UK’s mem­ber­ship of the Euro­pean Union, it would not come as a sur­prise if many of you were sit­ting on your hands and wait­ing for the re­sult of the ref­er­en­dum be­fore mak­ing your own move.

PRO­TECT­ING FROM UN­CER­TAINTY

Tak­ing out a French mort­gage can prove a very as­tute way of pro­tect­ing your­self against some of the eco­nomic un­cer­tainty re­sult­ing from the up­com­ing ref­er­en­dum, par­tic­u­larly con­cern­ing the euro/pound ex­change rate. If you’re keen to buy, but you are wor­ried about the cur­rent cli­mate of un­cer­tainty, we would strongly rec­om­mend that you con­sult an ex­pert French mort­gage con­sul­tant to find out how a French mort­gage can pro­tect you against mar­ket move­ments.

Nev­er­the­less, there will still be plenty of you who would pre­fer to wait un­til af­ter the ref­er­en­dum is out of the way be­fore go­ing ahead with a prop­erty pur­chase in France, which means that sum­mer 2016 may prove to be a busy time for Bri­tish buy­ers on the French prop­erty mar­ket. How­ever, this is not to say that there is noth­ing for prospec­tive buy­ers to do in the mean­time.

You can scan and sub­mit pa­per­work elec­tron­i­cally

GOOD TIME TO BOR­ROW

Many of you will wish to take ad­van­tage of the ex­cel­lent rates cur­rently of­fered by French lenders to non-res­i­dent bor­row­ers. The Euro­pean Cen­tral Bank re­duced its bench­mark in­ter­est rate to 0% in March 2016, and French mort­gage rates are con­se­quently at his­toric lows. Mean­while, the banks are per­fectly happy re­ceiv­ing mort­gage ap­pli­ca­tions from in­ter­na­tional buy­ers, and many of them have an at­trac­tive range of credit prod­ucts de­signed for these bor­row­ers.

In order to se­cure a French mort­gage, you will have to sub­mit a com­pre­hen­sive ap­pli­ca­tion which es­sen­tially con­sists of doc­u­men­ta­tion re­lat­ing to your cur­rent fi­nan­cial sit­u­a­tion. Banks out in France do not have ac­cess to UK credit checks, and re­quest full dis­clo­sure from Bri­tish bor­row­ers con­cern­ing all fi­nan­cial as­sets, li­a­bil­i­ties, in­come and out­go­ings. The banks also ask that you send over three months’ worth of state­ments for all bank ac­counts held un­der your name.

This may sound like an ar­du­ous task, but the banks are work­ing to make the process quicker and sim­pler for ap­pli­cants. Doc­u­ments are rarely re­quired in their orig­i­nal form, so you can scan and sub­mit the pa­per­work elec­tron­i­cally. In­deed, the one as­pect that con­sis­tently causes the long­est de­lay dur­ing the early stages of a mort­gage ap­pli­ca­tion is the time taken by ap­pli­cants to put to­gether their file of pa­per­work. In prepa­ra­tion for a sum­mer view­ing trip, you should there­fore think about putting aside all the fi­nan­cial doc­u­ments and bank state­ments that you re­ceive in the com­ing months.

Fur­ther­more, be sure to think about how you man­age your fi­nances in this pe­riod. As men­tioned, French un­der­writ­ers need to see bank state­ments dat­ing back over a pe­riod of three months. So what are they look­ing out for?

GET PA­PER­WORK IN ORDER

Firstly, French banks are very cau­tious about over­drafts. Such fa­cil­i­ties are much less com­mon in France than in the UK, and the use of an over­draft can be looked upon neg­a­tively, so think about mak­ing sure that your bank state­ments are in the black and keep them in a healthy con­di­tion for the fore­see­able fu­ture.

Ideally, you might also choose to pay into a sav­ings ac­count each month. It also goes with­out say­ing that these lenders like to see as much ev­i­dence of sav­ings as pos­si­ble when you make an ap­pli­ca­tion. They will cer­tainly want to see enough money to cover your de­posit and pur­chas­ing fees, with a cush­ion left over so as to not over-stretch your­self.

Once you have the fi­nan­cial doc­u­men­ta­tion in place, you will be in the po­si­tion to ap­ply for a fi­nan­cial pre-ap­proval. This pre-ap­proval, or ‘agree­ment in prin­ci­ple’, will pro­vide peace of mind for ven­dors when you go over to France on your view­ing trip. Ap­proach­ing a ven­dor with the lender’s pre-ap­proval al­ready in hand proves that you are a se­ri­ous, de­pend­able buyer. As the funds have al­ready been pledged by the lender, in ef­fect it makes you a de facto cash buyer, putting you in the per­fect po­si­tion of strength when you en­ter into ne­go­ti­a­tions on the pur­chase price.

Hope­fully this ar­ti­cle has given you some food for thought re­gard­ing the prepa­ra­tions for your French prop­erty pur­chase. While it is per­fectly nat­u­ral to be cau­tious about the up­com­ing EU ref­er­en­dum, the like­li­hood is that – what­ever the out­come – pur­chas­ing a prop­erty in France will re­main a fea­si­ble and pop­u­lar op­tion for Bri­tish ci­ti­zens. To put your­self at the front of the queue, start tak­ing the nec­es­sary steps, start­ing with ob­tain­ing preap­proval for a French mort­gage.

Simon Small­wood is joint man­ag­ing di­rec­tor of In­ter­na­tional Pri­vate Fi­nance in­ter­na­tion­al­pri­vate­fi­nance.com

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