Tough economic conditions combined with tighter lending conditions by European banks might make you think twice about applying for a euro mortgage in France. Speak to the right people though and doors should open.
Cue Liam Wilkinson from Fortier Finance, a mortgage broker that specialises in premium international mortgages. Here he answers questions about current conditions in the French market, with a focus on higher value loans. Fortier Finance is a trusted partner of our sister site, Your Overseas Home.
Can I get a French mortgage as a non-EU buyer?
How easy is it for non-residents, including Brits, to get a French mortgage currently – has it got harder in recent months?
Certainly for British clients, the rapid rise in UK interest rates coupled with increasing rates in France is squeezing the affordability of a French mortgage. French banks look closely at a client’s ability to repay debt and have a strict debt/income ratio. Applying for loan here is very much a tick-box exercise, which sadly doesn’t make it easy for entrepreneurs right now.
What key criteria do banks look at when assessing a non-resident’s eligibility?
Net income over three years minus fixed liabilities. They look for consistency year to year. Many business owners who only take a small salary and dividend and re-invest in their company will meet a lot of barriers from retail French banks. Many French banks now want Brits applying for high-value loans to be a ‘qualified’ high-net worth individual (HNWI) confirmed by an independent public tax advisor, which means having an income above €300,000 p.a. or net assets above €3,000,0000.
What type of financial profiles (for non-residents) are looked upon most favourably by French banks?
Public listed company employees with proof of a high salary and bonuses for at least three years are one of the simplest applications. The key things we need are your P60, tax returns, letter-headed document confirming your employment and standard pay slips.
Image shows concept of using a mortgage broker
Do banks’ attitudes and lending criteria change much with HNW clients compared to lower budget loans (sub €1m)?
In short, there are more options for HNW individuals, as we work with private banks as well as retail banks. For example, interest-only mortgages with a clear repayment strategy are commonplace with our clients.
To be put in touch with Liam and the team at Fortier Finance, make an enquiry with Your Overseas Home today
What sort of limits are there in terms of age/ minimum loans and deposits for non-residents?
The maximum lending age with French banks is 70-75 years old. As a broker, we specialise in deals upwards of €750,000 only. Of course, other brokers can provide lower value loans.
Can you outline typical deals popular with your clients right now?
Ultra-high net worth (UHNW) clients purchasing or refinancing an asset (property) tend to prefer ‘dry’ mortgages, which come without any personal financial guarantees associated to the loan facility (the property alone is used as collateral). The best deals now typically offer 60 per cent loan to value (LTV) for a five-year interest-only loan.
Alternatively, a 25-year amortization mortgage for loans between €1million and €5milllion are typical and available with 80-85 per cent LTV.
Browse homes in France on our Property Portal
Are deals negotiable at all? Can you help clients customise their product?
Yes, some mortgage products can be a mixture of amortization and interest-only. This tailored approach can help with the affordability of a mortgage and ultimately help to get it approved with credit committees.
Do French mortgage lenders insist clients take on other financial products with them?
With retail banks, yes. Life insurance is a must these days (not necessarily with the lender though), while other products they may request is a savings account. This doesn’t apply to private banks though.
A family putting savings into a pot
Presumably it’s easier to get a loan and there is more choice for Brits moving and buying a primary residence in France?
Actually, often it is not, and it depends on the client’s situation. Banks will look at a client’s historical income which means that being in the middle of a move or in ‘transition’ in fact creates more headaches! Until a client has arrived in France and settled into employment here it is hard to define a client’s financial situation accurately. The key to a successful application is being able to paint a clear picture of a client’s profile and finance requirements without any gaps or ‘grey’ areas.
To be put in touch with Liam and the team at Fortier Finance, make an enquiry with Your Overseas Home today
You might also be interested in our Buying in France page below…
