How to secure your French mortgage?

From navigating the mortgage process to making your application: key steps and must do’s for obtaining a mortgage in France.

The French mortgage market is one of the biggest in Europe, with a range of financial products available to both residents and non-residents of France. 

What type of mortgages are available in France?

Most French mortgages are capital repayment loans with either variable or fixed rates. The majority of borrowers opt for a fixed term mortgage as it provides stability over the long-term.

As well as fixed-rate mortgages, there are also capped-rate (with limits on how high interest can go), mixed (fixed term, then variable) mortgages and bridging loans. For investors, there is a potential option of interest only loans. 

The average length of mortgage is a key difference between France and the UK:

1. In France, fixed rate mortgage loans dominate: generally these are for 7 to 25 years.
2. In the UK, the period granted for fixed rate loans is normally 2 to 5 years.

How much can I borrow for a mortgage?

How much you are able to borrow will largely depend on your income – and what you spend. In the UK, banks’ lending criteria will often take more account of the value of a property – the asset. However, in France banks use a ‘loan to value’ ratio to determine how much they will lend; most banks will loan in the region of 70-85% of the property’s value.

Example: a property valued at €200,000, with a €40,000 deposit (20%), you'll need a mortgage of €160,000, resulting in an LTV (loan-to-value) ratio of 80%.

French mortgage interest rates

Interest rates in France are fairly competitive compared to the rest of Europe. Rates are determined by the value of the Euribor (Euro banks inter-lending rates) plus a margin. 

The mortgage process in France

The key steps involved are the following:

• Affordability

The first stage is determining how much you can borrow.

Borrowers must prove to a lender that they are only spending a maximum of 35% of their take-home pay or disposable income on all debts, this includes mortgages, loans and credit cards. To prove you can afford a new mortgage, you'll need to show them payslips, bank statements, and details of any existing debts. They'll also consider your savings and overall financial health.

Don’t forget that you will need funds to pay the deposit, estate agent, Notaire’s fees plus any budget for renovations, home improvements and repairs.

• Applying for finance

The lender will make a decision in principle after receiving your mortgage application and determining affordability. At this stage, you know how much you can realistically afford when choosing a property to buy. If you are buying with a mortgage, you should include a clause within the sale agreement. This will protect you in the event that the mortgage falls through. Don’t forget that you will also need to arrange life insurance cover.

• Receiving a mortgage offer

The lender sends a formal mortgage offer with full details including: amount borrowed, loan term, interest rate (APR), fees, mortgage protection insurance and redemption penalties. You can sign the mortgage offer after a cooling off period of 10 days.

TOP TIP! Steps to avoid being turned down for a mortgage

• Be realistic about what you can afford: If you apply for a mortgage you simply cannot afford, a lender will reject your application.
• Employment details: Include current and past employment. Lenders like to understand your income over a period of time. If self-employed, provide evidence of earnings over the required time period.
• Avoid making mistakes on your application: Be accurate and ensure that you have completed all of the required information.

Check out also our useful guide for anyone considering buying a property in France. 

First published: 10th September 2024
Image used is provided by Getty Images.