French Mortgage
Discussion
Hi All,
Considering a place in France and have been working on the assumption of 25% down. The French estate agent put me in touch with a UK based French mortgage broker who has been working on my behalf. Despite a healthy deposit and decent income two banks have come back and offered somewhere in the region of 45%. I don't think they get the fact I run a company. This LTV makes it very unappealing!
Any tips and tricks for a UK based chap to secure lending on a French place? Anyone better than others to talk to?
Considering a place in France and have been working on the assumption of 25% down. The French estate agent put me in touch with a UK based French mortgage broker who has been working on my behalf. Despite a healthy deposit and decent income two banks have come back and offered somewhere in the region of 45%. I don't think they get the fact I run a company. This LTV makes it very unappealing!
Any tips and tricks for a UK based chap to secure lending on a French place? Anyone better than others to talk to?
I tried to get a french mortgage. €75,000 (or around £63,000).
Had £15,000 to put down. Mortgage of 20 years at around 4.3% (around €340 a month if i remember rightly).
I have an income of just over £1,600 a month (more if I do overtime etc), minimal outgoings, house paid for in the UK, and I got refused by quite a few places, so gave up!
Its a total nightmare trying to get a french mortgage. I tried BNP Paribas and the mortgage company recommended by JB French Homes (Cant remember who they were now).
Natwest only did mortgages for expats going to live permanently over there(mine was going to be a holiday home). The only way they could do it was if i remortgaged what I had (They were desperate for me to consider this, and offered me a rate of 2.5%), but I wasn't willing to do that, given my UK home is paid off and didn't want to lose it for the sake of a holiday home in france.
Its almost as if the french mortgage companies don't want us English taking out mortgages with them. In the end, after trying almost every english speaking company I could find in the region of france I wanted to buy, I gave up! It was very stressful and a total nightmare.
Had £15,000 to put down. Mortgage of 20 years at around 4.3% (around €340 a month if i remember rightly).
I have an income of just over £1,600 a month (more if I do overtime etc), minimal outgoings, house paid for in the UK, and I got refused by quite a few places, so gave up!
Its a total nightmare trying to get a french mortgage. I tried BNP Paribas and the mortgage company recommended by JB French Homes (Cant remember who they were now).
Natwest only did mortgages for expats going to live permanently over there(mine was going to be a holiday home). The only way they could do it was if i remortgaged what I had (They were desperate for me to consider this, and offered me a rate of 2.5%), but I wasn't willing to do that, given my UK home is paid off and didn't want to lose it for the sake of a holiday home in france.
Its almost as if the french mortgage companies don't want us English taking out mortgages with them. In the end, after trying almost every english speaking company I could find in the region of france I wanted to buy, I gave up! It was very stressful and a total nightmare.
Edited by James_N on Wednesday 25th September 10:55
It is generally difficult to do. Having your own business doesn't particularly make you more or less attractive as a borrower. You simply need to demonstrate a large difference between what you earn and your outgoings.
It is often easier to remortgage or borrow against your UK property.
It is often easier to remortgage or borrow against your UK property.
I used these guys when buying in the US a couple of years ago and they connected me with a locally (US) based mortgage broker who did a (reasonably) good job. I've never bought in France so not sure what their arrangements there are but worth a call IMO https://www.choice-loans.co.uk/guide-to-french-mor...
James_N said:
Its almost as if the french mortgage companies don't want us English taking out mortgages with them. In the end, after trying almost every english speaking company I could find in the region of france I wanted to buy, I gave up! It was very stressful and a total nightmare.
I think this pretty much sums up my experience so far. The offer is still to be finalised but looks like an interest only mortgage will be offered on the following basis:Edited by James_N on Wednesday 25th September 10:55
- 14 year length (with review by them at 7 years to make sure I can still afford it).
- I must keep 75% of the value of the property in liquid assets (ie cash in an account)??
WTF springs to mind. If I wanted to tie the cash up I wouldn't be paying you the interest every month! No idea what is happening here. I stupidly assumed a 25 year, 75% LTV mortgage would be easy to get but no. I'm not signing up to the above as it seems in 7 years they could withdraw.
Will see how it develops. Really want to complete on the place I have found but not sure what lengths I am prepared to go to get it.
NorthDave said:
I think this pretty much sums up my experience so far. The offer is still to be finalised but looks like an interest only mortgage will be offered on the following basis:
- 14 year length (with review by them at 7 years to make sure I can still afford it).
- I must keep 75% of the value of the property in liquid assets (ie cash in an account)??
WTF springs to mind. If I wanted to tie the cash up I wouldn't be paying you the interest every month! No idea what is happening here. I stupidly assumed a 25 year, 75% LTV mortgage would be easy to get but no. I'm not signing up to the above as it seems in 7 years they could withdraw.
Will see how it develops. Really want to complete on the place I have found but not sure what lengths I am prepared to go to get it.
The French Mortgage business is much more heavily regulated by the government than in the UK. There are laws (not guidelines) about how much of your income can go on interest expenses. I live and work here and had plenty of nightmares getting a mortgage when we first arrived and ended up using contacts to get a good deal. Even so we found it easiest to remortgage our house in the UK (which we rent out) to increase the deposit in France. I appreciate people preferring not to but it would be a lot easier, if possible to remortgage in the UK and pay cash in France if it's just a holiday home.- 14 year length (with review by them at 7 years to make sure I can still afford it).
- I must keep 75% of the value of the property in liquid assets (ie cash in an account)??
WTF springs to mind. If I wanted to tie the cash up I wouldn't be paying you the interest every month! No idea what is happening here. I stupidly assumed a 25 year, 75% LTV mortgage would be easy to get but no. I'm not signing up to the above as it seems in 7 years they could withdraw.
Will see how it develops. Really want to complete on the place I have found but not sure what lengths I am prepared to go to get it.
zbc said:
The French Mortgage business is much more heavily regulated by the government than in the UK. There are laws (not guidelines) about how much of your income can go on interest expenses. I live and work here and had plenty of nightmares getting a mortgage when we first arrived and ended up using contacts to get a good deal. Even so we found it easiest to remortgage our house in the UK (which we rent out) to increase the deposit in France. I appreciate people preferring not to but it would be a lot easier, if possible to remortgage in the UK and pay cash in France if it's just a holiday home.
I am investigating that option. Doesn't make quite as much sense to me from a risk point of view but I'm keeping it as an option.You and James N have both illustrated why it's so difficult for you to get the mortgage. Neither of you want to take the risk of losing your own home to buy a holiday home by re-mortgaging. You want the bank to take the risk for pretty small potential returns on their part. The banks are fully aware that if you get to the stage where you can't afford to pay someone it's going to be them, as it's asset you would be able to lose reasonably painlessly.
Bluequay said:
You and James N have both illustrated why it's so difficult for you to get the mortgage. Neither of you want to take the risk of losing your own home to buy a holiday home by re-mortgaging. You want the bank to take the risk for pretty small potential returns on their part. The banks are fully aware that if you get to the stage where you can't afford to pay someone it's going to be them, as it's asset you would be able to lose reasonably painlessly.
I would imagine that the 25% or more I am prepared to put down gives them a warm feeling inside?NorthDave said:
I would imagine that the 25% or more I am prepared to put down gives them a warm feeling inside?
The Economist reckoned earlier this year that French house prices were almost 40% overvalued compared to rents suggesting that they could fall much more than your 25% deposit would cover so I'm afraid the answer is probably no. The French have a very different relationship to property than the British and have little concept of their home as an investment. Many of them will spend their whole adult lives in the same house. 25% is by no means a big deposit in France. What they really want to know is what your salary is net of any other debt payments that you might be making and they would typically be prepared to lend you an amount that you could repay using perhaps 30% of that amount.None of this surprises me.
I recently tried to source a property in the UK for someone living in and working in Bermuda but wanted a bolthole place in the UK for when they come back. Most mainstream lenders weren't remotely interested at any LTV as he's not a UK resident currently, a UK tax payer or current property owner. There's no history of maintaining UK credit and no real way of them chasing him in Bermuda if he stops paying etc.
It doesn't surprise that most of the above probably applies when trying to secure a French mortgage, especially if it's not going to be your main residence.
I recently tried to source a property in the UK for someone living in and working in Bermuda but wanted a bolthole place in the UK for when they come back. Most mainstream lenders weren't remotely interested at any LTV as he's not a UK resident currently, a UK tax payer or current property owner. There's no history of maintaining UK credit and no real way of them chasing him in Bermuda if he stops paying etc.
It doesn't surprise that most of the above probably applies when trying to secure a French mortgage, especially if it's not going to be your main residence.
I had another chat with the mortgage man last night and it would appear they have been so restrictive as we went to them and said this is what we would like. If you flip it round and say I'd like to buy this property - how would you like to finance it? They seem much happier. For instance, apparently interest only mortgages are very rare in France. They couldn't work out how I would pay for it at the end.
Hopefully a capital repayment with a decent chunk down is going to get things moving properly.
Hopefully a capital repayment with a decent chunk down is going to get things moving properly.
25% equity can look quite skinny to a bank when you consider their worst case scenario. Legal fees, estate agents costs, quick re-sale value, and that is even if they could gain repossession. This tends to be why in France the principal concern is the financial credibility of the borrower rather than whether the property value stacks up.
Also, there is ultimately no safety factor by not re-mortgaging your UK home and going local. A French bank in the event of a default and loss on your euro mortgage can apply to UK Courts for a European Enforcement Order. This has the potential to place a charge on your UK property, attachment to earnings, seizure of UK assets, freezing of UK banks accounts.
Also, there is ultimately no safety factor by not re-mortgaging your UK home and going local. A French bank in the event of a default and loss on your euro mortgage can apply to UK Courts for a European Enforcement Order. This has the potential to place a charge on your UK property, attachment to earnings, seizure of UK assets, freezing of UK banks accounts.
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