"To help you find your dream home in the south Charente-Maritime
 and buy it so that it is a continuing dream"

When considering a mortgage it is wise to obtain a number of quotes, both from France and from the UK...I recommend Banque Populaire (France) and Baydonhill (England).  By contacting these lenders you will have a variety of choices of terms, rates, and conditions and each company is excellent.

Banque Populaire

Banque Populaire offers mortgage facilities and insurance for property, health or auto. Catalina Chevalier is the bilingual banker in charge of this programme for the Banque Populaire and in addition to meeting you for the initial discussions of the package tailored to your requirements, is responsible for introducing you to the English speaking banker at your local branch of the Banque Populaire and being available to discuss any banking matters at any time thereafter.  I have been very impressed at the effort Catalina has expended to assist my clients with mortgages.

There are 26 Banque Populaire branches in the Charente Maritime, at Pons, Saintes, Jonzac, Royan, Rochefort (2), St. Jean D’Angély, Saujon, Surgeres, Matha, Ars-en Ré, Aytré, Chatelaillon, Fouras, La Rochelle (5), La Tremblade, Le Bois Plage, Marennes, Montguyon, Nieul-sur-Mer, Périgny, and St-Pierre-D’Oléron.

Catalina can be contacted on 0033.(0)6.85.89.00.66

and

catalina.chevalier@centreatlantique.banquepopulaire.fr

Baydonhill 

Regarding an English option, Baydonhill, at www.baydonhill.com , has provided exceptional service and mortgage rates on a consistent basis to my clients and as a result of this uniformly excellent service, I have decided to recommend them as the English source of mortgages. 

Because Baydonhill is a mortgage broker, it can act independently on your behalf to secure a mortgage tailor-made to your specific requirements and because it canvasses a wide range of lenders can offer exclusive deals to help you obtain the best finance package available when buying property in France.  

*     Post:     160 Brompton Road, Knightsbridge, London, SW3 1HW   

Examples of possible mortgages

EURO SWITCH...

For homeowners in France who have sterling mortgages outstanding on UK property

...Re-finance mortgage

...Optional equity release

...Additional renovation loan available

...Loan to value = 80%

If you know that you may require a mortgage before you come to France to find your dream home, it is wise to discuss the amount you will be able to borrow before you leave the UK. This means that if you find your dream home you are in a much stronger position to make a deal if you know how much will be available than you would be if you had not already made the preliminary contact.  

In light of the recent fluctuautions in the £/€ exchange rate, one possibility is to negotiate a mortgage in €uros thus avoiding the effects of a weakening pound:

For example...if you bought a house in January of 2007 when the £/€ was 1/1.51, for the euro equivalent of £200,000, you would have received 302,000€uros for your £200,000 but in January 2008, for example, with the pound at 1.22euros you would receive 244,000€uros for the same £200,000, however if you negotiated a mortgage in €uros (without any exchange considerations) you would avoid this penalty.

The Property Buying Process in France

In France, the purchase of property is a regulated process.  Once a price has been agreed with the vendor both parties will sign a preliminary agreement, a "Compromis de Vente" or 'Promise to Sell', (which in my office is written in both English and French), and after the 7-day ‘cooling off’ period pay 10% of the purchase price as the deposit.  All monies are paid directly to, and held in trust by, the Notaire who is a government appointed solicitor responsible for completing the conveyance and collecting the government taxes.

If your purchase is dependent on receiving a mortgage then you will have a "clause suspensive" or 'subject to' clause permitting you to withdraw from the agreement without penalty if it is not possible to obtain a mortgage.

After a period, usually 10 to 12 weeks unless a different completion is agreed, you will sign the Acte or deed and pay the balance of the price, again through the office of the Notaire, who is responsible for distributing the funds to the vendor, the agency, the government and the Notaire’s own fee from the Notaire’s trust account.

French Mortgages and How They Work

All French mortgages are full status and proof of income and outgoings will be required.

French mortgages can be arranged for acquisition, renovation and construction

In the usual case, a deposit of 20% of the purchase price is required and you will also be liable for solicitor’s fees, and  Euro mortgages are repayment loans and the maximum term available is 20 years.  All mortgages should be fully repaid by the age of 70 and French life cover is required by the lenders. 

The general guideline is as follows: of an applicant's net income, 33% should cover existing outgoings and the monthly repayment on the Euro loan

If you are self-employed, income is assessed as the average of the last 3 years' net income.  A percentage of rental and investment income may also be considered.

If employed, a lender will base your income on your payslips and the amount that is credited to your account monthly.

Outgoings considered are liabilities such as mortgage/rent in the UK, personal loans and maintenance commitments.

The mortgage is secured on the French property.  Valuations are carried out by lenders and the cost is covered by the arrangement fee payable to the lender only on receipt of a loan offer. Generally, the arrangement fee charged by the lender is approximately 1% of the loan amount with a minimum of €686 and a maximum of €2,000, and this varies from lender to lender.

Mortgage funds will be released to the Notaire by the lender for completion.

For example...

...The applicant has a net monthly income of £4,000 with a UK mortgage of £500 and no other outgoings.  Taking into account 33% of the income (that is £1333), a borrowing with a monthly repayment of £833 would be considered.

Taxes and Other Costs

There are 2 property taxes which are both based on the average rental value according to the land registry.

Taxe foncière...payable by the owner of the property is equivalent to the rate system.

Taxe d'habitation...payable by whoever resides in the property.

Notaire fees are payable when you buy a property in France and these are taken from a table provided by the Notarial Association, and are about 7% of the cost of the property before the agency fee, Notarial fee and government taxes are considered. 

If you take on a French mortgage, a further cost will be passed on to you by the Notaire for registering the charge of the lender with the land registry.

Questions and Answers

How much can I borrow?

Contact your mortgage company for a personalized quote confirming the maximum amounts for which you can be considered over the term available.  The information provided will be based on current rates and lending practices of the major lenders in France.

Can I buy in the name of a company?

French lenders will not consider lending to a UK company but it is possible to create a French company expressly for the purchase of the property.  A Société Civile Immobilière is a transparent, non-trading company, with a minimum of 2 shareholders.  Any loan is then made to the company (the SCI) and the individual shareholders stand as guarantors.  This type of purchase has advantages for couples or groups buying together and anyone who wants to avoid French inheritance issues.

How long does the process take?

Once your lender has received a completed application form with all the requested supporting documentation, it will 'pre-qualify' the application very quickly, and will give a good indication whether the mortgage funds will be available.  The application will then be passed on to the appropriate lender and an 'in principle' decision is usually provided in 48 hours.  This in principle decision will be confirmed once the lender has received all the necessary financial information and the property has been valued.  Once the loan offer is issued there is a legal 'cooling-off' period of 11 days before you can accept the offer.  To ensure all formalities run smoothly for completion, a minimum six-week period should be allowed.

The financial documents required are:

-the last 3 months' bank statements

-the last 2 P60's

-the last 3 pay slips

-for self-employed applicants, the last 3 years' audited accounts and tax returns.