3. French Mortgage Loan Guarantees

International buyers may only be accustomed to conventional loan guarantees, but in France there are three different forms of security, or charge, which may be offered against a loan.

1. 3.1. Conventional Charge
2. 3.2. Priority Lien Charge
3. 3.3. Institutional Guarantee

Whilst the use of a conventional mortgage might be more readily understood and used by international buyers, 'institutional guarantees' are widely used in France, mainly because the arrangement and legal fees are generally lower than a mortgage.

Unfortunately, institutional guarantees are only available if you are fiscally resident in France, but as we know an increasing number of you rent in France before you buy, it may be of interest to first time international buyers as well as existing residents wanting funds for home improvement.

3.1. Conventional French Mortgage Charge - Hypothèque

A conventional mortgage charge is called a hypothèque conventionelle.

The legal process of mortgage registration is undertaken by a notaire, and their fees are around 2% of the loan amount.

There are also likely to be additional arrangement fees from the broker or lender.

In the event of sale of the property and reimbursement of the debt before the expiry period of the loan it is necessary for the mortgagee to pay for the redemption of the mortgage, a process called mainlévée.

This process has to be undertaken through a notaire with legal costs in the region of 0.5% of the loan, depending on total amount borrowed.

If the loan is ordinarily repaid in the normal manner, and the property remains in the same ownership, then the mortgage is automatically discharged after two years and no fees are payable.