Buying property is often one of the largest investments a person will make in their lifetime. It follows that not everyone will have the finances at the ready to buy a piece of real estate in cash. If you are considering buying French property, getting a mortgage may be an option worth considering; but you must acquaint yourself with the process so that reduce the number of bureaucratic delays in buying the property.
As a foreigner and especially one buying property in France for the first time, engaging the services of a real estate agent or property lawyer in France is vital. An experienced real estate agent can give you crucial pointers on the best bank to approach for a mortgage.
Alternatively, if you bank with a financial services institution in your home country that has a presence in France, you could do this in reverse. That is, request your home banker to refer you to a mortgage banker in the France branch. The banker in France could then help you locate a reputable real estate agent.
Save up for the deposit. Like banks anywhere else, most French lenders will require that you place a deposit that is a percentage of the purchase amount. The deposit can range anywhere between 15% and 20%.
If you are taking a mortgage against your salary, banks have a cap on the proportion of your salary that should go towards paying the mortgage instalments and any other recurring debt. As a general practice, lenders will not advance any mortgagewhose instalments exceed 33% of the applicant’s net income.
Scrutinize the different mortgage products and pick one that best meets your requirement. The main difference between mortgage products will mainly be in the rate of interest and how it is applied. In a fixed rate mortgage product, the interest rate is static throughout the life of the mortgage. In a variable rate French property mortgage, the price varies depending on market forces.
At the point of applying for the mortgage, the interest rate for the fixed rate mortgage is almost always higher than that of the variable rate mortgage. However, the volatility of the fixed rate mortgage can make it difficult to plan one’s finances on a long term mortgage facility.
You will also need to open a bank account. If you will be paying the mortgage through your salary, the lender may want you to open a bank account with them so your salary can be monitored and automatically deducted.