Owning your own property in France
is a dream come true for many people. For those who's always wanted to live in this charming country, purchasing a home is the first step. But before you can actually do that, you'll need to afford it first. And the most common way to go about it is to get a mortgage loan. Will it be easy to get a mortgage in France? The answer is yes, for the most part. You will, however, have to be aware of certain conditions, follow specific steps, and show important documents before you get that loan.
Can You Get a Mortgage in France as a Foreigner?
Since you can buy property in France
as a non-resident, it's only natural that you can, in fact, get a mortgage too. You don't have to be a citizen or resident of the country to take out a mortgage loan. Though how much you get will depend on various factors. For one thing, while most banks will loan you up to 70% or 80% of the property value, some would only lend around 50% if you're not from an EU country. But no matter where you get your mortgage loan from, what you will need as a non-resident is a local bank account
What are The Different Types of Mortgages in France?
Before you reach out to any financial institution for a mortgage loan, you ought to know what type of mortgage you'll need. According to Expatica
, there are a few main types of mortgage loans in France. The first and the most common among buyers is the fixed rate, the type that allows you to pay back the loan within a period of either six or 25 years. Another and most popular is the interest-only mortgage, wherein you only pay back the interest for an agreed initial period. And you ought to know about the capped-rate mortgage too which, as its name says, includes a capped upper limit for your repayment scheme.
How Much Can You Borrow For Your French Mortgage?
The amount your borrow for your mortgage in France depends on a lot of things. As already mentioned, while most banks will lend around 70% to 80%, non-residents from non-EU countries would only typically get around 50% to 70%. Now, if you've relocated to Paris
, Lyon, or Cannes—essentially became a permanent resident of France, however, you can borrow up to 100% for your mortgage loan. But this isn't set in stone. All in all, most financial institutions will look at many things to determine how much they'll lend you. They include your income (salary or business income), dividends, pension (in applicable), rental income, and more.
What are The Mortgage Costs in France?
Since getting mortgage in France means you'll be borrowing money, it makes sense that you'll have to spend it too. The process of taking out a mortgage loan in this country comes with a few costs. Firstly, there's the administration fee, which is usually around 1% of the amount your borrowed plus the VAT. Then there are the notary fees, which would depend on the property in France you're planning to buy, For newer properties, this fee costs 2% to 3% of the property value. But for older (than five years) properties, it costs around 6% to 8%. And if the lender required a valuation survey, you'll have to pay €250.00 to get it done.
What’s Your Mortgage Rate?
Now, what will your mortgage rate in France be? Well, this will also depend on a few important factors. They include the total amount you plan to borrow, the loan-to-value rate, and the mortgage type you choose. Not to mention the duration of your mortgage and the type of property you're buying too. And while your residency status doesn't matter when it comes to taking out a mortgage loan in France, it may serve as a huge factor in determining your mortgage rate. You're bound to have a lower rate if you're a legal resident since it means you'll have more than enough time to pay it all back.
What are The Required Documents You Need To Show
As with any other process, getting mortgage in France required you to show important documents. And yes, there are a lot. Apart from the mortgage application form, you'll also need to show valid ID (passports will do) with copies, proof of income, bank account details, bank statements (from the last three months), proof of current address (rental lease, utility bills, etc.), and statement of assets. You'll also need to show your signed preliminary sales agreement. And if you plan to conduct renovations and improvements on said property, you'd do well to show the accompanying contracts and legal documents.
Can You Refinance Your Mortgage in France?
Let's say you've already acquired your new property in France through all the legal means. Yet you still have to repay your mortgage loan. Can you take out another mortgage loan to help pay for the existing one? The answer is yes but it comes with a few conditions. They include higher interest rates, early repayment fees, and more. Don't worry, though! Refinancing your mortgage loan with another mortgage loan is quite common, not just in France, but throughout Europe as well. If you do decide to go this route, know that there is precedent for such a thing.
If it's your dream to get your hands on your own property in France, getting a mortgage loan here would be one of your first steps. Don't worry! The process of getting a mortgage in France is a lot simpler than you might think!