Know Your Mortgage Options When Buying French Property

by Howard Farmer - Date: 2007-03-19 - Word Count: 424 Share This!

French Mortgage For many hoping to purchase property for sale in France the prospect of getting a mortgage can be an intimidating one. But knowing exactly how the system works can help a prospective buyer obtain a loan with relatively little stress involved.

Like in Britain, mortgages are available at all major French banks and these institutions are regulated to ensure they are abiding by certain rules and regulations.

But as with any foreign country, there are some major differences in the way a mortgage is obtained and investors are advised to get up to speed on these before buying property in France.

Two types of mortgage are available for homebuyers purchasing French property - either repayment or interest only.

Mortgage products themselves vary, with some banks offering variable or floating rates with a fixed repayment variable term. Others provide mortgages with the monthly instalment changing regularly and a fixed term.

Property experts say the best time to apply for a mortgage in France is when the preliminary contract, or Compromis de Vente, is about to be signed. It is useful to know that by law, this contract can contain a get out clause to ensure the buyer can pull out in the event of a dispute or change of mind.

Deposits Anyone planning to get a mortgage when buying property in France will have to pay a deposit to the bank.

This cash sum is a way of letting the bank know that their client has a trustworthy source of income and will usually be expected to be paid regardless of where a mortgage is obtained.

The amount of money which is handed over as a deposit will depend on a variety of factors based on the situation of the individual.

Those who choose to live as residents in France and therefore pay income tax already may be offered a 100 per cent mortgage - in which case a deposit is not deemed necessary.

But many people who are thinking of investing in French property decide to remain in the UK and use it as a holiday home or rent it out to others.

In this case, the deposit will most likely be somewhere around 15 per cent of the final sale price.

Anyone who is buying a property but is not a European resident may be asked to pay a higher deposit of around 20 per cent.

The price of your new home will, of course, reflect the cost of your deposit but if you are able to obtain equity on your previous house or have saved regularly, then fronting this fee should not be a problem.

Related Tags: mortgage, real estate, france, french property

Howard Farmer
Property Guides to France
French Property for sale

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