When it comes to buying a house in France, a euro mortgage is definitely worth considering.
It’s a good idea to start the borrowing process early. Knowing you have the finance sorted can help you plan expenses with confidence. And you might find you get a more favourable borrowing rate as well as being in a strong position to negotiate with sellers.
Mortgages in France
If you borrow from a French institution, you will be allowed to borrow up to one-third of your total gross monthly income. Without a “stable” monthly income, it will be very difficult to secure a loan. French lending agencies and banks prefer to lend to salaried employees. They favour those working for the same employer the last three years.
French mortgages offer both variable and fixed rates from 1.50%-2.50% (2020). And require a deposit of 15% to 25% of the property’s purchase price. The maximum for a repayment loan is 85% with a 25 year maximum term. Or 75% maximum for an interest-only mortgage and 15 years maximum term. Interest only mortgages require the client to have assets eg a home in the UK. They are usually more difficult to obtain.
It is also possible to borrow from a UK-based bank (pre Brexit) but many buyers find borrowing for a French property from a French bank is easier.
Getting in touch with a French lender that specialises in offering mortgages to British expats might save you a lot of time and aggravation, as they will tell you exactly the requirements and help you get the best possible deal.
Fixed or variable-rate?
While a fixed-rate mortgage might offer the security of standard and consistent payments, it is usually more expensive than a variable one whose rate fluctuates depending on the movement of interest rates. It can either go either way in terms of benefits to the borrower.. In France, most mortgages are fixed-rate.
If you take out a French mortgage you’ll need building insurance as well as life insurance, both products might be offered by your lender. Life insurance guarantees that you can repay the loan. In some cases you might be asked to provide further documents such as a general medical examination certificate or blood analyses. Some policies require more information, such as where you travel to regularly.
Use a currency specialist
Specialist currency brokers can save you lots of money in the long term as a French property owner. Transferring sterling to euro can involve fees such as bank charges. However a currency transfer specialist such as UPFX can organise your transfers without extra costs while offering you competitive exchange rates. They can help you plan for your specific needs and budget, and offer helpful guidance about the property buying process (UPFX free property guide).
UK Government guidance on Buying a home abroad