Lending criteria

Lenders calculate the maximum mortgage you can have by adding your potential French mortgage payments to your existing UK mortgage/rent and repayments on other long-term borrowings. Together these should not exceed 33% of your gross monthly income. For example, if your UK mortgage is £200 a month, car loan £50 a month and the proposed French borrowing £250 a month, your gross monthly pay needs to be at least £1,500 or the bank will reject your application.

Proof of income is required by the lender. This can comprise earned income, pension, investment or rental income. However, not all lenders take all of these into account when determining how much you can borrow. You must also provide proof of identity, bank statements and evidence of existing loan payments.

Mortgages can be obtained to purchase or renovate a property, or both. If you need a mortgage for a renovation project, you must get estimates from licensed professionals so that your lender can see how much the work will cost.

Savills Private Finance (SPF) has arrangements with a number of French lenders enabling us to offer a bespoke service and attractive terms and conditions.

Insurance

Buildings insurance is compulsory, and most lenders also insist buyers take out some form of life or disability insurance. In some cases, the life insurance company may require that you and your partner (if you are buying with someone else) undertake a medical examination. This is often necessary if you and/or the person you are buying with is over 40 and the mortgage is more than €200,000. A medical exam is often required irrespective of your age if the mortgage is more than €400,000.

Valuation

Loans are available up to 85% of the mortgage valuation or purchase price, whichever is lower. Lenders don’t always insist that the property is valued but will do if they aren’t familiar with the area (often applies to rural areas) or the mortgage is more than €750,000.

Legal issues

Once you’ve found the property you wish to buy, you must sign a preliminary sales agreement – promesse de vente sous conditions suspensives. This is a binding contract between buyer and seller; once signed, the vendor can’t legally sell the property to another buyer. Make sure you understand what legal costs and government taxes you are liable for before committing yourself.

We strongly advise that you seek independent legal advice before signing the promesse de vente to avoid problems with estate agents or notaires. Your mortgage lender will need a copy of this document along with the application form before it will accept your request for a loan. Ensure you sign the document ‘subject to mortgage finance' because, once signed, it is legally binding whether you have received mortgage approval or not.

The next step is to ensure your mortgage is in place (see “Applying for a mortgage” below). Under French law, after you have accepted the final mortgage approval from your lender there is a ten-day cooling off period during which you can change your mind.

SPF endeavours to secure your mortgage within your preferred timescale but delays can occur owing to the French legal and banking system.

Completion

The final sales agreement or acte authentique brings together all the parties involved to complete the sale. The final deed of sale is signed and legal ownership transferred to you. On this date, or a few days beforehand, you will be required to electronically transfer the remaining funds to the notaire’s office. The seller will hand over the keys and you become the new official and legal owner.

Applying for a mortgage

It is advisable to arrange a mortgage in principle before committing to a purchase. This will enable you to find out how much you will be able to borrow, so you don’t waste your time looking at properties beyond your budget. Even if you haven’t found a property that you want to buy, our international division can help you to establish your affordability and issue an approval in principle based on your current financial situation.

If you have already found a property to purchase, we will send you a full application pack via email or in the post. If the property is still under construction, we can keep your file open until you tell us it is ready.

Should you require funds to put towards a deposit, or if you don’t qualify for a French mortgage, we may be able to help raise finance for your proposed property.

Contact SPF on 020 7877 4710 or email international@spf.co.uk

CHANGES IN THE EXCHANGE RATE MAY INCREASE THE STERLING EQUIVALENT OF YOUR DEBT

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SAVILLS PLC - INTERNATIONAL DEPARTMENT
SPF is part of the Savills Group, the international property consultancy formed in 1855. The Savills plc International team is based in London and is dedicated to providing a service to meet an individual's overseas property needs. For more information about Savills plc - International click here.