French loan terms, tips and facts for foreign investors

French lending rules and guidelines are very likely to be different from those of your country.  It is important to be well prepared if you are a non-resident intent on obtaining French financing.

1.  In France, a loan guaranteed by a mortgage gives a lender permission to sell your property at public auction in the event you fail to repay the loan in accordance with its terms.

2.  It is more difficult to obtain a mortgage from a French lender if you are not a resident.  Be prepared to provide detailed financial documentation.

3.  Be patient and have a good translator who is experienced with French lending.  (Some banks offer bi-lingual services.)

4.  Lenders have a variety of different loan programs available with different repayment terms, fixed and variable interest rates, and different upfront fees.  Make sure you read all of your paperwork thoroughly before committing to a loan.

5.   Most French lenders will allow your total debts (other loans and mortgages, rents, etc. plus the amount of the new mortgage) to equal no more than one third of your gross income.

6.  While this figure may vary depending on your personal situation, in general you will not be permitted to borrower more than 80% of the property value.

7.  The loan terms often range anywhere from 5 to 20 years, but generally will not extend beyond the time you turn 70.

8.  There are different types of mortgage guarantees.  Some are taxed at different rates than others and may also include stamp tax, mortgage registry fees, the notaire’s compensation, VAT and other expenditures.  An institutional guarantee is generally preferable to a conventional mortgage.  A lender’s lien is a tax exempt form of guarantee.

9.  French notaires are very experienced in all aspects of the French real estate transaction.  Your notaire may be able to offer some practical advice.

10.  The French mortgage industry is highly regulated.  They are required to help you if you run into difficulties repaying the loan.  There is also recourse available should you feel you have been treated unfairly.

by Cheryl Hartzman, AboutFrenchProperty.com - Copyright © About French Property