Getting a mortgage in France

Thinking of buying a property in France? Whether you’re thinking of moving or retiring there, buying a holiday home or an investment property, one of the first things you’ll need to know about is how to get a mortgage.

In this guide, we’ll cover everything you need to know about getting a mortgage in France. This includes types of mortgages, interest rates and fees, how to apply and how long it typically takes.

We’ll even show you how to save money on mortgage fees with Wise, which helps you send payments from the UK to France for less.

So, let’s get started.

Can I get a mortgage in France as a non-resident?

French banks and mortgage providers are often just as willing to lend to international buyers as they are to residents¹. This means that in theory, you should have no trouble getting a mortgage to buy your dream French property.

However, you may face some additional requirements and restrictions as a UK buyer. In France, the typical loan-to-value (LTV) ratio - essentially, how much the provider is prepared to lend you, compared to the value of the property - is around 70-80%². But some lenders will only grant mortgages for up to 50% of the purchase price for non-EU nationals.

As a foreign buyer, you may also have to do the following²:

• Open a French savings account containing a minimum deposit which covers at least 24 mortgage payments
• Take out a life insurance policy that equals 120% of your total mortgage - where the lender is the beneficiary
• Take out health and disability insurance policies to cover the cost of the mortgage - in some cases, over 50s may be asked to undergo a medical exam.

Whether or not you’ll have to meet these requirements depends very much on the individual lender. It’s always a good idea to check the terms and conditions of the proposed mortgage before going ahead.

Getting a mortgage after Brexit¹

Now that the UK has officially left the European Union, does this make it more difficult for British citizens to get a mortgage in France? Thankfully, it hasn’t - French mortgage lenders are willing to consider applications from both residents and non-residents, wherever they come from.

But there are a few potential Brexit-related points to note. In France, EU nationals can get a maximum LTV of 85% - although as we’ve discussed, the average is around 70-80%. For now, this includes British buyers post-Brexit. You can only get a 100% mortgage if you’re a French tax resident.

Following the Covid-19 pandemic, minimum mortgage loans in France are around €150,000 for EU buyers. This again includes applicants from the UK. For the rest of the world, the minimum a bank will consider lending is €250,000.

How are mortgages in France structured?

You can find the same types of mortgage in France as in the UK, which includes fixed term, variable rate and interest-only mortgages. A relatively recent addition to the French mortgage market are capped-rate mortgages.

Here’s a little more about each¹:

Fixed rate mortgages

One of the most popular repayment mortgages around, fixed-rate deals typically offer low rates and greater financial security. However, they can also have penalties for overpayment or early payment.

Variable rate mortgages

In France, variable rate mortgages are linked to the European Inter Bank Offered rate, or EURIBOR. This means the rate can fluctuate. You’d assume this automatically means a change to your monthly payments, but in France it usually results in a change to the overall mortgage term length instead.

Interest-only mortgages

If you’re looking into getting a buy to let mortgage in France, this is one of the options you may consider. It effectively means you only pay the interest on the loan, rather than the original amount borrowed. Your payments will be lower, but you’ll still owe the mortgage amount at the end of the term.

Interest-only mortgages in France can be difficult to get as a non-resident, as they’re only approved in rare situations where the applicant can prove they have enough liquid assets to cover the total loan³.

Capped-rate mortgages

These work just like variable rate mortgages, but with a cap on the rate. This offers more financial security, but you’re not locked into a fixed rate deal.

French mortgage rates

One of the main reasons France is such a popular choice for property purchases is its relatively low interest rates for mortgages. The excellent news for buyers is that rates have now reached their lowest levels since 1949, according to some sources.

On average, French mortgage rates are between 1.5% or 2.5%¹, although they have been as low as 0.9%⁴.

However, the rate you’ll be offered can vary depending on the amount you borrow, the LTV rate, the mortgage type and duration, the property and your residency status. You can find a handy French mortgage calculator here.

The approval process¹

Unusually compared to other countries in Europe, mortgage lenders in France don’t typically carry out credit checks on applicants, Instead, they base the approval process on your financial situation.

This means that you must pass strict debt-to-income checks, and provide extensive documentation to prove that you can afford the repayments. We’ll look at what paperwork you’ll need for your application later in this guide.

Here’s a key thing to be aware of. To get a mortgage in France, your financial liabilities (which includes mortgage payments, rent or other loan repayments) mustn't add up to more than 35% of your household income.

Other factors determining eligibility include:

• Age - some lenders will only approve mortgages for people under 75
• Employment - applicants in steady and permanent employment are preferred
• Insurance - you may need to provide evidence of life insurance, property insurance and perhaps other policies too depending on your situation.
• The property - lenders look at the age, condition and resale potential of properties when processing applications.

Fees and costs for getting a mortgage in France

Buying a property in France comes with a number of fees attached, just like many other parts of the world. You can expect to pay around 10-15% of the total purchase price² in property transaction fees, and some of these will be for your mortgage.

Let’s run through the main mortgage-related fees you need to know about²:

Set up fee (frais de dossier)

Most lenders in France will charge an initial set up fee. This is usually fixed as a percentage of the total mortgage amount.

Arrangement fee

On top of the set-up fee, you may also have to pay a mortgage arrangement or origination fee. This can vary and is often open to negotiation, but it’s usually around 1% with a €350 minimum. VAT is added on top.

Valuation survey fee

Before they can approve the mortgage, many lenders will require a valuation of the property to be carried out. This typically costs around €250.

Notary fees

When you get a conventional mortgage in France, it will need to be legally registered by the notaire. The fee for this is around 2%¹ of the total loan amount.

Save money on French mortgage fees with Wise

You’re bound to have costs to cover when buying a property in France, including all those mortgage fees. If you’re still based in the UK, you’ll need to find the most cost-effective way to send money to France.

Pause before using your bank, as banks tend to charge high international transfer fees. Plus, they often add a margin on top of the exchange rate, all of which makes your exchange more expensive than it needs to be.

Here’s a better option. Send money from the UK to France with Wise and you’ll get the real, mid-market exchange rate with no margins added on top. Better still, there’s only one small upfront transfer fee to pay.

International transfers with Wise are fast, fully secure and reliable. This means no delays to getting that French property purchase sorted.

Pricing/fees: Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information

How to apply for a French mortgage

The process of applying for a French mortgage is relatively similar to here in the UK. You can get an agreement in principle (AIP) before you buy the property, but can’t get an official offer until the initial sales contract is signed¹.

In this section, we’ll look at French mortgage brokers, the documents you need to provide with your application and the main lenders to focus on.

Should I use a broker or go direct?¹

You don’t have to use a mortgage broker to get a French mortgage, but it could be a smart decision if you’re a foreign buyer or have non-standard circumstances.

Firstly, a broker can search and compare the whole market on your behalf, to find you the best deal. They may even have access to discounted rates, or products that aren’t generally available.

There will be an extra fee to pay for their services, but this could be covered by the savings a broker could make you with a cheaper mortgage than you could find yourself.

An English-speaking broker can also help you navigate the French mortgage system, and offer advice on boosting your chances of getting approved.

What documentation will I need?

Here’s what you’ll need to provide with your application¹:

• Your passport
• Proof of residence
• Proof of income
• Bank statements and tax returns from the previous three months
• The initial sales agreement (Compromis de Vente) for the property purchase
• Life, property and/or health insurance policy documentation, as required by the lender
• Copies of any current mortgage or rental agreements
• A completed statement of assets form.

Which bank or lender should I choose?

Ready to start your mortgage search? Here’s a list of the main national banks and mutual lenders offering mortgages in France¹:

• BNP-Paribas
• Société Générale
• Crédit Industriel et Commercial (CIC)
• Crédit Agricole
• Crédit Mutual
• Caisse d’Epargne
• Banque Populaire
• La Banque Postale.

You can also try French property banks, such as Entennial, l’UCB, and Crédit Foncier. The final option is an international bank, like Barclays, HSBC, Halifax, and Royal Bank of Scotland.

Getting a mortgage in France from the UK

Not yet moved to France? Depending on the lender, you should be able to at least start your application online while still in the UK. You can get quotes, compare rates and offers, and even get an agreement in principle⁵.

Be aware though that you may have to make a trip or two to France to finalise your mortgage offer. For example, you may need to verify your identity or provide original documents in person.

Can I get a UK mortgage to buy in France?

It’s only possible to get a mortgage in France from a UK bank if it’s an international bank⁶. So, one that operates in both the UK and France.

This can be a convenient option for expats, as they’ll be familiar with how the bank operates, can access information in English and may also have an existing credit history with the bank.

How long does it take to get a mortgage in France?

The process of getting a mortgage approved in France can be quite lengthy. You can expect it to take from 12-14 weeks from start to finish¹. To avoid any delays, make sure you have all your documentation in order.

Refinancing a mortgage in France²

Refinancing a mortgage basically means taking out a new loan and repaying an old one with it. People usually do this in order to get lower interest rates or secure a smaller monthly payment. This is not very popular in France and the overall costs can get quite high, so you won’t find too many mortgage refinancing or remortgaging products.

In case of remortgaging, some of the extra fees to look out for are administration costs, higher interest rates and early repayment fees on your old mortgage. You won’t be able to avoid notary costs, since it’s necessary to include the name of your new bank on your documents. It’s best to weigh your options and see if it makes sense for you to take out another loan to refinance your mortgage.

In France, it’s possible to refinance up to 80% of the value of your property and the minimum loan is €100,000. The banks usually require some type of guarantee, such as a big enough annual household income, in order for you to even qualify. Keep in mind that, even if the new mortgage is smaller than the previous one, the financial qualifications are still an important factor.

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Navigating the mortgage system in a new country is always difficult at first. But hopefully after reading this guide, you should have a better idea of how to get a French mortgage - and how much it’ll cost you.

Good luck with your property purchase!

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Sources used for this article:

1. FrenchEntrée - beginner’s guide to French mortgages
2. Expatica - a guide to French mortgages
3. FrenchEntrée - difficulty of getting an interest-only mortgage in France
4. The Local - lowest French mortgage rate in history
5. BNP Paribas - online mortgage applications
6. Online Mortgage Advisor - French property mortgages

Sources checked on 10-Nov-2021.