8. Applying For a French Mortgage
8.1. Application for a Mortgage
It is clearly going to make sense to organise the finances as best you can before you get near to actually making an offer on a property.
We appreciate that this is not always easy if you do not have a clear idea of what you want to buy and how much you want to spend.
Nevertheless, whether you are remortgaging or proposing a mortgage on the French property, most mortgage lenders are able (sometimes reluctantly!) to indicate the amount they would be prepared to offer through a pre-approval mortgage certificate, which you can waive under the nose of the agent or seller.
If you actually want a firm offer of a French mortgage then you are going to have to sign the contract for the house before this can be done. Lenders will not grant a firm mortgage offer without a signed contract and they will be reluctant to hold an offer open for more than a month or so.
It is therefore important that the purchase contract on the property contains a condition that completion is subject to securing a mortgage.
In terms of documentation the lender may well want to see, at least, the following documents:
- Marriage certificate
- Tax notice;
- Salary/Wage slips;
- Sale contract;
- Proof of deposit;
- Last three months bank accounts;
- Audited annual accounts (if self-employed).
If you are seeking to include renovation costs in the mortgage, then you are likely to be asked for estimates of work from professional tradesmen.
8.2. Fees Payable
The costs associated with setting up a French mortgage are not insignificant, although with fees on the increase in the UK and elsewhere, it is a moot point as to whether they are higher than other countries.
The lender may request that a survey for the purposes of valuation is carried out, but this is by no means a general rule. Many lenders are happy to accept to lend against the purchase price. If you are lending against you current home, then a valuation survey is more common.
As we outlined on previous pages, the level of the fees will depend in large measure on the type of finance you are able to obtain – whether conventional mortgage or other form of loan guarantee.
A conventional mortgage, called a hypothèque, is (slightly) more expensive than other forms of loan guarantee, so if possible you should ask the lender whether other loan guarantee options are available to you.
If you take out a conventional mortgage, legal and administrative fees are up to 2% of loan, to which you need to add any brokers fees which may be payable.
You also need to take out obligatory insurance/mortgage protection costs which are about 0.5% of total costs.
Since 2022 the government has abolished the medical questionnaire for certain applicants, as well as a 'right for forget' for certain cured illnesses. You can read more at Reform of Mortgage Loans.
In some cases the administrative costs can be reduced or waived, particularly where an institutional guarantee is being used over a conventional mortgage.
Look out also for early redemption fees, which may be circa 3%, but, once again, these are negotiable. They are more likely to apply in relation to fixed rate mortgages than a variable rate mortgage.
Try and negotiate with your lender over the fees and shop around!
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