French Mortgages

If you are planning to buy a property in France and require a French mortgage, you will want to make sure that you find the best French mortgage option for you.

Before getting a French mortgage to fund your property purchase, you should get as much information as possible about the mortgage rates and options available to avoid paying thousands of Euros more than you need to over the lifetime of your mortgage.

The mortgage market in France has numerous lenders offering a variety of different mortgages options, which can be a bit bewildering to navigate. There can be big differences in the costs and terms of the French mortgages on offer.

We have provided some general information about mortgages in France below to help you get started. If you require any further information or details of a recommended French mortgage specialist who can help you, please contact Total Buying Abroad on 01244 478 911 or at info@totalbuyingabroad.com.

French Mortgages- The Basics:

It is possible to get a French mortgage directly from the lender. There are however many French mortgage brokers who can help you make sense of the French mortgages on offer and help to find the best mortgage for you.It is possible to get French mortgages on a Capital & Interest repayment basis or on an interest only basis.

The maximum loan to value for a French mortgage can be up to 85% of the property value depending on the lender. Generally this is between 70-80% however.

The maximum term of any mortgage available is usually around 25 years. This may vary depending on the type of loan and the lender.

Criteria For French Mortgages:

Affordability is one or the main criteria for deciding eligibility for a French mortgage. Therefore in order to qualify for a mortgage in France, the French mortgage lender will need to establish whether you can afford to maintain the mortgage repayments.In order to assess whether you will be able to afford the French mortgage repayments, the bank will review details of your income, such as salary, investment income and rental income. French lenders will often be able to take into account any future rental potential from the property you are looking to buy in France.

Your existing outgoing payments are also considered to analyse your existing financial commitments. This will include any other mortgages or rental payments, loans, credit card payments and even payments such as maintenance payments or any court judgements against you.

Generally the mortgage lender will want to make sure that any liabilities (including your French mortgage) will not exceed a certain percentage of your monthly income. This is typically a third (33%) but can vary from lender to lender.

Other factors such as your age and eligibility to obtain life insurance cover (a requirement for French mortgage offers) will be considered.

Documents Required for a French Mortgage Application:

You will need to supply proof of your income and existing liabilities. The following is an indication of some of the information you will be asked to provide:

 

If you are employed you will usually be asked for:

  • Your last three month’s payslips
  • Your latest P60
  • Your last three month’s personal bank statements
  • Details and proof of any other income

If you are self-employed you will usually be asked for:

  • Your last three year’s Accounts
  • Latest personal tax returns
  • Your last three month’s personal and business bank statements
  • Details and proof of any other income

If you have rental income you may also be asked for a copy of any tenancy agreements.

The French Mortgage Process

The process of applying and obtaining a French mortgage is as follows:
  1. Contact a French Mortgage Specialist

You will need to review the range of French mortgages available to establish the best mortgage option for you. Many people choose to use a Mortgage Broker who specialises in French mortgages to assist them. Instructing a French Mortgage Advisor can have considerable advantages as well as reducing the time and hassle in finding and reviewing your options.

You should choose a company with a solid, longstanding reputation. If you would like details of a recommended French Mortgage Advisor, contact Total Buying Abroad on 01244 478 911 or at info@totalbuyingabroad.com.

  1. Obtain a French Mortgage Quotation and Agreement In Principle

Your French Mortgage Advisor will obtain a mortgage proposal which shows the French mortgages and rates available to you.

  1. Documentation

Your French mortgage specialist will obtain the lender’s mortgage application forms and confirm the documentation that you will be required to provide in support of your French mortgage application. Your French mortgage specialist will submit the application to your chosen lender and liaise between you regarding any queries.

  1. Acceptance

The French Mortgage Lender will analyse the information and documents provided and, if satisfied, will accept your application.

  1. Bank Account and Life Insurance

Lenders will require you to open a French bank account and also obtain life insurance. Your French mortgage advisor will be able to assist you with this. It is often a requirement that the account and the insurance are provided by the lender.

  1. Mortgage Offer

If the French mortgage lender is satisfied that all the criteria has been met, the mortgage will be offered. By law in France there is a 10 day “cooling off” period so you will not be able to sign to accept and return the French mortgage offer until more than 10 days have passed.

  1. Completion

Completion of a French mortgage takes place in front of a French Notary (notaire). You will need to sign the mortgage deed in front of the notaire. Your lender will usually send the paperwork relating to the mortgage to the notaire, who will be responsible for the registration of the French mortgage deed once the completion of the property purchase has taken place.

Top Tip: It is advisable to seek advice from a French lawyer before agreeing to purchase a property or obtain a French Mortgage. Your French lawyer can help ensure that any legal purchase contracts protect you and your deposits should there be any difficulties with the mortgage application.

Benefits of Specialist French Mortgage Broker

Although it is possible to deal directly with French mortgage lenders, we have outlined below some of the benefits of using a specialist mortgage broker to help you with obtaining a mortgage in France:
  1. Saving you time and hassle:

Obtaining a French mortgage can be complex and time consuming, especially if you don’t speak French fluently. A mortgage broker who is experienced in obtaining mortgages in France can save you the time and hassle in finding the right French mortgage for you.

  1. Saving you money:

Based on the information you give them, a French mortgage advisor will be able to advise you as to how much you can borrow, what the monthly fees will be and any additional costs involved.

French mortgage brokers work with many mortgage lenders in France and will know about the products on offer. Good brokers know how to interpret the small print, and identify the hidden costs. They know which banks are offering promotions and special deals which could save you money in the long run.

  1. Helping you to avoid the pitfalls:

By understanding what you require from your French mortgage, a broker specialising in French mortgages will evaluate your creditworthiness and obtain an accurate idea of how much debt you can cope with. This can help them select the best French mortgage product for you.

It is important that you do not take on a mortgage that is bigger than you can manage, taking into account potential interest rate rises and currency fluctuations. A specialist overseas mortgage broker can help you avoid difficulties with this.

  1. Experience and Market knowledge:

Specialist French mortgage brokers are regularly updated on the best mortgage deals in France and will check all the documentation for your application.

Experienced overseas mortgage brokers will have helped many other foreigners to get a French mortgage, which gives them valuable experience that you can benefit from.

  1. Negotiating Power

Mortgage specialists can often use their reputations with French lenders to get the best deal for their clients. A combination of business volume, convenience for the lender and reduced risk for lenders, means that French mortgage lenders value what the mortgage brokers do in bringing them clients. They are often therefore willing to negotiate better terms to win their business.

  1. Help you to understand the process and documentation

Mortgage advisors who specialise in French mortgages can help you to understand the mortgage application process in France, the documents required and provide you with the information required in a language you understand.

For details of a recommended French Mortgage specialist, contact Total Buying Abroad on 01244 478911 or at info@totalbuyingabroad.com.

French Mortgage Costs

In addition to the usual costs associated with the property buying process in France, if you obtain a mortgage for a French property you will also need to budget for the following additional costs:

French Mortgage Advisor Fees

Mortgage brokers who specialise in assisting clients find mortgages for French property purchases may charge a fee for their services. Whether they charge you a fee and the amount varies from company to company and may depend on the amount of work involved and whether they are paid a commission by the mortgage company or not.It may be that the best deal for you in the long term comes from a lender that does not pay commission. In this case a broker fee will usually be charged and this is usually somewhere between 0.25% to 2% of the loan amount depending on the amount of work involved and the amount of loan required.

French Lenders Valuation Fee

Valuation fees are usually a couple of hundred euros.

French Lender’s Fees

French Banks usually charge a set up or an administration fee. These fees are generally around 1% of the loan amount. This is usually subject to a minimum fee of around €350.

Insurance

Most French lenders will insist in you taking out Life insurance as well as property insurance.

Legal Fees

Lawyers fees, Notary fees and Land Registry fees are usually increased where there is a mortgage secured against the French property being purchased due to the extra work and documentation required in dealing with the lender, the mortgage deed and registering the mortgage.

Top Tip

It may be that your French mortgage will be in euros and so mortgage payments will need to be transferred to your French bank account each month together with money for additional regular expenses, such as utilities, maintenance or management fees.If the income you use to make the repayments is not received in euros (e.g your salary or rental income) you will need to consider the impact of fluctuations in exchange rates, which may significantly affect the cost of the monthly mortgage payments.

If your mortgage repayments are in a different currency to your income, it is recommended to use a foreign currency exchange company to convert your funds to euros for your French mortgage payments and other bills. They can help you save money on your French mortgage repayments as they offer an exchange rate far superior to that offered by high street banks.

If you would like more information about a recommended currency exchange company, contact us and we will be happy to put you in touch with a reputable currency specialist who can provide further details.

For more information about buying property in France, download our free guide.

Pensions and Investments in France

If you have moved or are planning to move to France, you will need to know how to receive your income, such as state pension, private pensions and investment income in the most efficient way from both a practical and a tax perspective in France.

Any existing investments structures, which generate income for you whilst in your home country, may not continue to receive their tax benefits once you become a resident in France and subject to French tax rules.

There may also be tax advantages which you would be eligible for under French law when you receive your income in France but are not benefitting from as part as your existing pension or investment structure.

France also imposes a wealth tax on the value of your worldwide assets if they exceed a certain value. You should therefore consult a specialist financial advisor experienced in advising expats in France to consider your tax planning.

Total Buying Abroad can put you in touch with a recommended financial advisor in France who can advise you as to the best way to deal with your assets ready for your move to France. Contact us on 01244 478 911 or at info@totalbuyingabroad.com.

We have also set out some information below to assist you with considering your income arrangements in France to help you make sure that these are dealt with in the best way possible for you.

What happens to your state pension if you move to France

If you are receiving your state pension from the UK, you can still claim your UK State Pension if you live in France.

If you live in France but have never worked there, you should claim your UK state pension by contacting the International Pension Centre (IPC) in the UK.

If you are moving to France from the UK and already claim your state pension you should inform the IPC of the changes to your circumstances to prevent any problems or delays in paying your pension payments.

Once you are resident in France you will need to declare income from your UK state pension to the French tax authorities.
If you are receiving a State Pension from a country other than the UK, you should contact the pension authority in the country the pension will be received from to ascertain how to receive your state pension when in France.

What happens to my private pensions and existing investments if I move to France?

You can usually receive the income from your private pensions and investments in France. Such investments are however likely to be structured in a way that means they are tax efficient in the country in which they were set up but not necessarily tax efficient in France.

You should review your existing investments and income when planning moving to France to ensure you do not end up paying more tax than you need to and that you comply with the French tax laws.

If you are an expatriate living in France, or planning to move there, you should consult a specialist financial advisor in France who can review your options with you and advise you as to the tax implications of your pensions and investments for you in France.

It may well be that you can gain tax benefits in France by restructuring your pension or other investments so that you can, legitimately, pay the least amount of tax possible in France while maintaining your investment objectives.

I have a financial advisor in my home country, do I need a financial advisor in France instead?

Many people have a financial advisor in their home country to look after their investments and do feel a loyalty to their existing financial advisors. Financial advisors will structure their client’s investments to ensure that they are appropriate for their clients needs and set up in the most tax efficient way in that country.

However, unfortunately, your financial advisor in your home country will not usually have the expertise to ensure that your investments are dealt with in the most efficient way from a French tax perspective.

Although there are a few exceptions, financial advisors are usually only qualified to advise clients about suitable structures based on the tax liability in the country in which they practice.

If you move to France or become a tax resident of France you will usually be liable for French taxes. You should therefore have a financial advisor qualified to advise you regarding French tax and investments, who can advise you as to the best way to structure your investments so that they work for you as a French tax payer.

Will my pensions and investment income be taxed in France?

If you intend to reside in France you will become a tax resident straight away, as soon as you arrive in France, and liable to pay tax in France.

Even if you don’t intend to become resident in France, if you spend more than 183 days a year in France you will be deemed to be a resident of France for tax purposes and will be liable to pay income tax under the French tax rules.

You will also be liable to French tax if you receive income in France, for example rental income from a property there.

You should find your local tax office in French (Centre des Finances Publiques) to make yourself known to them as soon as possible. You will need to fully declare your worldwide income, capital gains and wealth on your tax returns.

There are various tax planning opportunities available to people moving to France which could usually significantly reduce the amount of tax you pay. There may also be taxation reliefs available under double taxation agreements between France and other countries in which you are liable to pay tax to ensure that you do not pay tax on the same income twice.

It is important to take professional advice on your tax matters in France to ensure they are both tax-efficient in France and compliant with French tax system.

If you require details of a recommended financial advisor in France who can advise you about how to deal with your income, investments, succession plans or taxation matters, contact Total Buying Abroad on 01244 478911 or email info@totalbuyingabroad.com.

Estate planning and French inheritance taxes

France has its own succession and inheritance tax regime, which may be very different to the tax rules in your home country.

In terms of who can inherit your assets in France, this is something that needs to be considered as France has forced heirship laws which dictate that certain relatives inherit certain proportions of your estate. Although recent European law has provided ways to circumvent this, this needs to be carefully considered together with the France inheritance tax laws. French inheritance taxes are paid by the beneficiaries and the rate of tax payable depends on the relationship of the beneficiary to the person they are inheriting from.

Getting in touch with a financial advisor in France can provide considerable tax benefits. As everyone’s situation is different however, you should make sure you take professional advice regarding your own specific situation to make sure any arrangements are compliant and suitable for you and your family circumstances.

If you would like details of a recommended advisor to assist you with French succession matters or with regard to your income, investments or taxes in France contact Total Buying Abroad on 01244 478911 or at info@totalbuyingabroad.com.