|
Can I get a French mortgage?
French banks base their calculations on your income. The income they take into account is salary and dividends. In the case of someone who is salaried the calculation are quiet simple as they just take your taxable income if your salary is the same every month. For income which is variable they will generally take an average of the last 3 years. On the basis of this income generally the total of your monthly loan and mortgage payments must not exceed 33% of your monthly taxable income. There can be slight exceptions to this rule depending on your income and overall situation. The charges taken into account in the calculations are mortgages, rent (if you are a tenant), maintenance (if divorced), any loans or monthly crédit card payments. Types of loans
There are several different types of loans available on either fixed or variable or a "combination of both. Generally, French mortgages are capital and interest repayment but some lenders also offer interest only solutions. Maximum LTV
The maximum loan to value varies from one bank to another but we can find up to 100% of the purchase price (or valuation) for tax residents of France and 85% for non-residents . This usually excludes the notary fees, agency fees and arrangement fees. The minimum loan amount we offer is 100 000€. Mortgages can be obtained for a minimum of 5 years and a maximum of 30 years (subject to age of applicant) depending on the type of loan required. For mortgages less than 100 000 Euros a set up fees will be charged. Please ask us for a quote... Joint purchase Joint purchase of the property requires joint borrowing with most French mortgage lenders consequently, joint income and liabilities are included when assessing the borrowing capacity for more than one borrower. French notary
Once you have found the property of your choice and agreed upon a purchase price, you will be required to enter into a written agreement to buy.The conveyancing for the sale takes place through the offices of a notary. The French notary is a publicly appointed official. As part of a long established French legal profession, the notary has full professional indemnity cover which offers you added protection in the unlikely event of his negligence. It is his responsibility to ensure the property title is in order, transaction of the sale is completed correctly, absence of preferential rights, sellers obligation too otain necessary documentation concerning asbestos, lead poisoning,wood worm etc. A notary may be appointed by each party or may represent both. His role is to legally implement what the vendor and the purchaser have agreed. At this stage, a deposit of between 5 and 10% of the purchase price is paid and remains in escrow with the notary. Preliminary contract
There are two types of preliminary agreement. You will be asked to sign either : - A "Promesse de vente" : A binding undertaking to sell with an option(as opposed to an obligation) to purchase, - A "Compromis de vente" : A binding agreement to sell and purchase. This is the most common type of contract. Your notary will advise you which form of agreement is most suitable.Once you have signed this contract, you have a 7 day "cooling-off" period, following this period the contract becomes final and legally binding. Estate agents often deal with the "Compromis de vente/promesse de vente". However the agent must be licensed to issue these and to take deposit monies. You should ask the agent to confirm this. Normally, however you will see this authority* on display within the agency. The deposit is forfeited if you decide not to proceed, unless this is justified because of non-fulfilment of one of the specific clauses stated in the preliminary contract. These clauses are known as "Conditions Suspensives" and protect the buyer's right to withdraw from the contract prior to completion covering issues such as failure to obtain the necessary financing, proof of title to the property, good planning searches including the sellers statement as to the existence of any natural risks. Provided that all the conditions of sale as noted in the "compromis or promesse" have been satisfied, it is usual for completion to take place within two or three months. Upon completion the remaining monies must be forthcoming and the purchaser and vendor will be both present to sign the "acte de vente". Should you be unable to attend the signing, a power of Attorney may be given to the notary. In most cases vacant possession will be granted on the day of the signature. It is a legal requirement in France that all properties be insured at completion. * called his or her "Carte Professionnelle” Local taxes
There are basically two local taxes you are required to pay in relation to your property. The notaire will give you the relevant details of the costs relating to the property being purchased as they vary according to the town in which you live."Taxe fonciere" is a real estate property tax. This tax is payable even if the property is inhabited, providing it is furnished and habitable. "Taxe d'habitation" is a residential, occupancy or dwelling tax. This tax is computed on the basis of the property's rental value. It is payable by anyone who lives in the property, whether as an owner, tenant or rent-free. It is paid annually, at the end of the year, for the residence you occupied on January 1 st of each year. Payment of these taxes are usually paid in one instalment or can be paid on a monthly basis. Forms for the assessment of both taxes are sent out by local councils and must be completed and returned to the local tax centre ("Centre des Impots") by a specific date for new properties. Buying through a company (SCI)
Buying a property in France through a French non-trading property company (Societe Civile Immobiliere or SCI) can be beneficial. The principal advantages of an SCI are that its shares can be simply transferred to new owners and after the company has been established for three years, stamp duty is lower than it is on direct transfers of property. On the death of an owner, shares in an SCI are treated as movable assets and can be bequeathed in accordance with the laws of the owner's place of domicile, thus avoiding the restrictions of French succession law. If you plan to buy a property through an SCI, this should be done at the outset and all advantages and disadvantages must be considered in advance. One concern for example is that the British tax authorities consider that a taxpayer who owns shares in an SCI may be deemed to be an employee of the company and therefore receiving a taxable benefit in kind for the use of the property. Please ask your notaire and your local tax authority for advice about this. |
What are the different fees to be paid for my project?
Here is a summary of the different fees you will have to pay with a mortgage : - Notaires fees ( legal fees) - Garantie fees ( fees taken by the notaire for the charge taken for your mortgage) - Bank set fees ( bank admin fees for processing your mortgage) - Brokerage fees ( Fees taken by us for processing your mortgage. In most cases we don't charge fees when we are paid by the bank) Pre-approval
Indicating the maximum loan amount acceptable can be obtained from us by filling in our application prior finding the property. Obviously, this agreement will be subject to the property you choose, receipt of supporting income documentation, acceptance by the insurance company of the mandatory life cover and the result of a valuation if required Mortgages Notary's fees
Your notary will undertake to complete all the formalities necessary, however, the exact cost associated with the purchase of each property will vary slightly depending on the work undertaken and where the property is situated, etc. As an approximate guideline you should expect to pay the following conveyancing costs : - Between 6% and 7% of the agreed purchase price for existing properties. - Between 2% and 3% of the agreed purchase price for new properties . Traditionally these costs are payable by the purchaser. Mortgage costs
If you are obtaining a mortgage through a French bank it will be secured by a charge on your French property, it will need to be registered at the local Land Registry. This will incur further costs payable to the Land Registry Office (Bureau des Hypothèques) which are stipulated in the offer sent by the bank. The notaire will requests these fees at the same time as his fees. We can give you a fairly precise estimate of these fees. New build developments
There are however a number of developers offering condominium type properties in a building development, you are usually obliged to buy it off plan ("vente en etat futur d'achevement") i.e. before it is built. This type of purchase should not be confused with time share. Similar to developments in the U.K. each appartment is referred to a plot "lot" and you offer to buy in anticipation of the property being built to the specifications advertised on a site plan or in the literature. The preliminary contract is known as "contrat de reservation" and it is subject to a cooling off period of seven days. The contract contains the timetable for the property's completion, payment dates etc. Staged payments are required during the construction of the property, unlike other countries where the developer would only receive a deposit and the rest of his money after the property is fully built. Payments are usually spread over 12 to 18 months. A deposit of initially 5% of the purchase price is required at the signing of the "contrat de reservation" which is usually a fixed price and inclusive of VAT. Funds are then required in stages by the builder, based upon what stage of construction the property is at, subject to confirmation that each stage has been satisfactorily completed. A five per cent retention is usually made by the purchaser against finishing off and minor defects on completion. Before entering into any agreement to buy "Off plan", we would strongly advise you to ensure that the developer or builder has a guarantee known as "garantie d'achèvement" which protects against defaulting builders and developers before the property is completed. All developers and builders must be underwritten by a bank, or by the developer himself, providing he meets liquidity requirements. For leaseback projects please call us for further advice as there are different types of leaseback projects and we can advise you on the best areas to buy these in. Guarantees and construction insurance
For ten years from reception of the works, the contractors and advisors remain liable for any defect which affects the main structure of the building or a major element of equipment, rendering it unfit for its purpose; for example foundations, roof...etc. Should you decide to sell the property during this period you are liable to the purchaser for the same guarantee. "Dommage ouvrage" insurance This insurance is either included in the contract signed with the builder or taken out by the purchaser. In the case of construction defect, this pre-finances all necessary repair works until the liability of the responsible builder is invoked. From the end of the first year after reception of the construction works until the end of the tenth year, this insurance covers the full cost of all works required to repair the building and the elements of equipment. "Garantie de livraison"- "Delivery guarantee" This insurance legally binds the builder to deliver the works in due time and at the agreed price mentioned in the contract. It also covers in the case of the builder going bankrupt during the works. This section only applies to new build developments,new build houses and extentions. Estate agents and notary fees
If you choose property via an estate agent, don't be surprised to find that you and not the vendor will be asked to pay their commission.Commission of between 5% and 10% is the norm according to the value of the property and, more often than not, is included in the advertised purchase price. Please check this before entering into any agreement to buy. Similarly, notaries often offer properties for sale and charge commission which is usually paid by you the purchaser. When buying a new property, bear in mind that developers usually include the commission charges in the advertised price. Buying a plot of land and building a new house
Once you have found a plot of land make sure it is constructible by checking the local planning regulations at the local town hall (MAIRIE). The planning permission is also given by the local town hall “Mairie”.When applying for a loan to build you must provide proof of land ownership or a copy of the sales agreement should you be in the process of acquiring the land. With regard to the construction of the building, it is advisable to engage the services of a registered architect by signing a 'contrat d'architecte' or a house builder ( called a "constructeur de maison individuelle")The contract provided by an architecte offers all the necessary building services ranging from the project development, dealing with local authorities (planning permission, local authority regulations etc.), the appointment of contractors, work supervision to the authorising of releasing stage payments.Otherwise in the case of the house builder, it is important to sign a 'contrat de construction de maison individuelle" with a well established builder. This contract contains legal information pertaining to the plot of land, the materials used for the structure of the building, the construction schedule, detailed plans and the guarantees and insurance cover put in place during the works and following completion. |
IMPORTANT INFORMATION
The banks in France no longer accept equity release as part of your deposit for a French property. The funds you invest in the project have to come from savings. Please contact us if you have any questions about this.
The banks in France no longer accept equity release as part of your deposit for a French property. The funds you invest in the project have to come from savings. Please contact us if you have any questions about this.
