Trying to secure a French mortgage? Give yourself the best chance

Trying to secure a French mortgage?

Give yourself the best chance

Up until now, 2012 has certainly been an eventful year for the French economy. Banks have had to contend with the ongoing financial troubles affecting the eurozone, in addition to the uncertainty inevitably caused by the country’s own presidential elections.

Consequently, some mortgage applicants have found banks to be more cautious than usual with regards to lending for French property purchases. This results in refused applications and a lot of frustration for otherwise keen buyers.

Certain criteria must always be met in order for a buyer to qualify for a mortgage with a French lender. For example, when taking into account the future French mortgage payment, all contractual outgoings must not exceed one third of a borrower’s monthly income.

So, what steps can you take to give yourself the best possible chance of successfully obtaining a French mortgage?

The answer to this question largely rests in how you manage your bank accounts. As part of the application, all French lenders will ask to see three full months of statements for each account that you hold. They will want to see that you are in complete control of your finances, and that you are ideally adding to your savings on a monthly basis. Overdraft facilities are not commonplace in France, and banks will take a dim view of applicants who regularly dip into an overdraft or, worse still, who have exceeded an overdraft limit.

Credit card payments do not typically form the basis of the affordability calculations carried out by French lenders. You should, however, aim to reduce your credit card debt as much as possible before commencing the application. The ideal scenario for the lender is therefore that the buyer is not overly indebted already and, month after month, can be seen to put aside money. This creates the reassuring impression that there is space for another outgoing alongside the applicant’s existing commitments.

Lenders will almost always demand a 15% or 20% deposit for purchases financed by a mortgage, and buyers will also have to pay for the notary fees out of their own funds. In the current lending climate, credit departments are asking for evidence of savings over and above the bare minimum. This is essential in reassuring the lenders that you will be able to cope with the ongoing financial demands of maintaining a new property.

Some of you may also be fortunate enough to have access to donated funds for your purchase, be it from a family member or friend. Caution should again be advised in this scenario. More and more, the lenders will require the buyer to be contributing at least some of their own funds to the purchase. It is no longer the case that a complete absence of savings can be made up for by a sizable donation to the buyer’s benefit.

With regards to the property being purchased, the lenders will invariably carry out their own valuation to confirm that it is a sufficient security against which to guarantee the loan amount. It has become increasingly common for properties to be ‘down valued’ and for lenders to refuse the financing on these grounds. If you are taking out a mortgage for your purchase, it is best to avoid properties which are completely isolated in rural areas. Although these often represent the best bargains for your purchase, the lenders may worry that they will be difficult to sell on if they ever needed to be repossessed.

The most important thing to bear in mind is that all French mortgage banks employ very different criteria when it comes to assessing a mortgage application. Just because you are not able to secure a mortgage with one French lender, it doesn’t necessarily mean that will be the case across the board - shop around is always the best advice!

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Consideration for some of the practicalities of buying property in France……

It’s quite understandable that a great many people who are looking to buy a property in France, particularly if it is to be a vacation home, have had a dream for a long time and in many cases that dream consists of peace, tranquillity, isolation and as much land as their buying euros can get them.

‘We really want a place with land – we feel so hemmed in at home and have always wanted space – perhaps something with an orchard ………  We want to be able to get away to a place that’s quiet and not surrounded by other people – yes we really want to be right out in the country…….!’

We hear this from so many of the clients that we talk to and yes doesn’t it sound wonderful?  But we never want people to make a mistake.  Our job is to work with people to find a property that is a perfect gem for them and so we regularly challenge this dream.  We take our responsibility very seriously and try hard to pass on some of the practicalities of living with this dream and what it will actually mean to our clients.

If it’s right for you land is great and it brings with it some great opportunities.  Properties with large amounts of land are certainly readily available and compared to elsewhere still great value in France.  But if it’s a vacation home, who is going to maintain that land and who is going to keep that garden looking pristine for each time you visit.  It’s certainly possible to employ property and land management companies to do this for you but if you can’t run to that expense do you really want to be spending all of your vacation time, mowing, pruning, trimming, digging and in some cases harvesting orchard fruits in quantities that you probably can’t consume- It’s certainly worth consideration? Would a small manageable garden with a terrace allowing you to sit with a glass of something suitably chilled and enjoy the view be more appropriate and give you more of the lifestyle dream that you have.

Even if the property is for a permanent move – perhaps a retirement, is the land that is manageable now going to be as much of a pleasure in say 5 or 10 year’s time?

Similarly, solitude and isolation have a great attraction particularly if you are surrounded by neighbours at home but consider the practicality of the journey for fresh bread and croissants each morning or the forgotten bottle of milk?  If you can’t walk to even a basic shop do you really want to have to get into the car for these little daily tasks or emergencies?

If you don’t have easy access to a restaurant or a bar, do you really want to get into the car every time you fancy an evening out? And perhaps more importantly, does that mean that the second glass of wine with dinner would not be a good idea?  Again certainly worth serious consideration.

Of course in our job we understand that each client is different and in some cases the practicalities of living with the dream far outweigh any disadvantages but make sure that all the aspects of your new life are considered and whichever way you do decide to go we can certainly help you find the property of your dreams.

And as a PS and certainly an important property tip, just because it’s going to be a holiday home – don’t think that it’s a good place to ‘practice’ you DIY skills.  Even if you think you will never sell on your property, try to get work done to as high a specification as possible.  Buyers want the best value they can get and if work has been done, a finish that is as professional as it can be.  We have seen some DIY horrors in our time and advise our clients that unless they are well skilled and understand French structural nuances to leave work to the professionals either French artisans or expats who have been recommended.  Ensuite bathrooms created in corners of bedrooms from UPVC cladding – I don’t think so………. 

If you do need to do work and want to use French artisans, be prepared for the 4 or 5 different tradesmen it will take to complete a new bathroom for example.  If you can’t be there yourself to oversee the work, don’t just hand over the keys and expect completion – get someone to project manage on your behalf – there are companies out there that will do that for you….like us Brittany Gems

Saturday is a big day for us ………..Bastille Day!

Bastille Day, the French national holiday celebrated on July 14^th each year, celebrates the storming of ‘La Bastille’ prison by French peasants in 1789 and therefore the start of the French revolution.

While most people think the holiday commemorates just the storming of the Bastille, it actually also commemorates the Fête de la Fédération held on July 14, 1790 to celebrate its first anniversary. A huge national party, the Fête de la Fédération was held to celebrate the new post-revolution French state, and has come to be seen as a symbol of the birth of the nation of France.

The Bastille was a prison where people had been unfairly jailed by the King and famous for holding political prisoners and those whose writings displeased Louis 16th. Thus the Bastille had become a symbol of the unfair repression of the monarchy.

Somewhat ironically, in actuality there were only 7 inmates housed in the Bastille when it was stormed. Truth be told, the storming of the Bastille was more important as a symbolic act of rebellion than a practical act of defiance. Although it was certainly an important moment in the French Revolution and the history of France, the typical image of courageous French patriots storming the Bastille and freeing hundreds of oppressed peasants is not quite historically accurate.

Still, the whole day, its history and now the large national party that it has become, is extremely important to the people of France with fireworks being the highlight in most French towns.

To us this year it is equally as important as it will be the first ‘Bastille Day’ that we have spent in St Malo and therefore marks our own revolution and the rebirth of our life here in France.

Vive la France and Bonne quatorze Juillet!