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Six steps to a mortgage loan for your dream home in France

If you live outside of France but are interested in buying a French real estate property, finding a banking partner for your mortgage loan can be very difficult and an obstacle course. To facilitate the process, we help you with our partner: a seasoned French loan and insurance broker. They can help you find a loan with a French bank and describe the possibilities according to your personal and financial situation.

A loan application’s complete timeline and process in France take about four months. Before you make visits, it’s good to know that you are aware of the budget the bank allows you to spend. And maybe you need some renovation work in France; this can be added to the total sum you want to lend.

Six steps to a mortgage loan for your dream home in France

 

  1. Pre-approval (called “Avis favorable”)

Each bank has a specific assessment of loan applications for foreign clients. Proposals may differ according to age, personal situation, nationality, country of residence, type of home purchased in France, the unique contribution required. Before applying for a loan, it is essential to request our partner analyze the conditions to propose (duration, interest rate, minimum contribution).

 

  1. Analysis of your personal and official documents

Once you have found a property using our French Riviera Property Buying Guide, our partner will ask you to gather documents confirming your situation. The list is communicated to you, and the required documents will have to be sent back as a scanned PDF. After analysis of the paperwork, the broker will contact the bank, which will confirm its loan conditions (called “accord de principe”).

 

  1. Security and loan insurance

The bank will take security for the loan in case of default. It will either get a financial institution called a “caution” to pay the loan for you or, most of the time, require a mortgage called a “hypotheque”.

The bank will also require loan insurance to cover medical issues, including the death of the borrowers. A medical questionnaire must be filled out online, and sometimes, the bank may request additional medical exams. When the security and insurance agreement is validated, the loan is approved.

 

  1. Account opening

It is necessary to open a bank account with the bank that has accepted the loan. It is from this bank account that the monthly payment is made. The bank will also ask for a savings transfer, and the amount will be determined according to your borrower profile. Often, the bank will ask for a 6-month advance payment.

 

  1. Loan contract

The loan contract is sent to you and your notary. After the reception, you must wait 11 days before accepting the proposed mortgage. Our broker partner will organize the release of the funds between the bank and the notary. A notary in France is comparable with a real estate lawyer in the US. When you use the team of Living on the Côte d’Azur, we will introduce you to our notary network. The notary speaks English and will be paid by the notary of the seller. Only in case you want to buy new construction in France from abroad, it is more logical to use the notary of the project developer.

 

  1. Notary deed

Once the final signing date is made by the notary, you must make final preparations. Ensure you have all the water and electricity meter info, and that you register as the new owner with the different suppliers. The easiest way is to take over the running accounts from the previous owner.

Don’t forget to arrange home insurance to protect the property against damage and loss. The effective date must be before or on the day of the signature of the act of sale. If you don’t have insurance, the French notary can refuse to complete the transaction! Contact us for an English speaking Allianz insurance broker.

If you have all this in place, you can either travel to France to complete the final sales deed in your French notary’s office. You can also choose to sign a power of attorney to allow your French notary to sign for you. Read more about the process for buying French property. With the experts and services of Living on the Côte d’Azur, you will be soon enjoying your French Riviera dream home!

Apply for a pre-approval mortgage

How to understand French mortgage loan contracts

All contracts will be in the French language by law, but the notary will arrange a translator (at your cost) to make sure that you understand the sales deed and the details of the property purchase. Here’s a list of typical French contract words and their translation.

 

Avis favorable = Pre-approval

The bank confirms that it is interested in making the loan before analysing all personal documents. This step is the first indicator of the feasibility of making a loan in France.

Pret or hypothéque = Loan for a house

Amortisation = Parts of the monthly payment

This corresponds to the repayment of the capital borrowed (or the sum borrowed).

Amortisable pret = a loan with fixed terms of prepayment

The amount, duration and periodic repayments (capital repayment and interest) are determined at the time it is set up, according to a schedule. Repayments may be fixed or variable according to the chosen loan and bank possibilities.

Accord de principe = Basic first agreement

After analysis of the borrowers’ documents, the bank confirms its loan conditions

Paiement differé = Deferred repayment

Deferred repayment (« différé »): period during which the borrower does not repay any capital. The borrower only pays the interest on the loan. Insurance charges are also collected during the deferred repayment period.

Organisme de caution = Financial surety

A commitment by a financial organism to substitute for the borrower if the borrower does not pay his debt.

Indemnité de remboursement anticipé = Indemnity of anticipated refunding

In the event of refunding of the loan in an anticipated way, the bank can require the payment of penalties or compensation for anticipated refunding; the law however framed this practice in a strict way (maximum 3% of the outstanding capital without exceeding a semester of interest at the date of refunding).

Tableau d’amortissement = Amortisation table 

A table showing the amount owed by the borrower at each date of the loan by detailing the breakdown of the repayment between the capital, the interest, the insurance charge and the outstanding capital after each payment.

Taux d’intérêt = Interest rate

The percentage by which the bank’s earnings on a sum of money lent to the borrower is calculated. The interest rate is expressed per year.

Taux fixe = Fixed rate 

A rate that remains unchanged for the duration of the loan.

Taux variable /révisable = Variable/revisable rate

The rates of a loan whose variation is linked to the evolution of one or more reference indices. The variable/revisable rate is very rare for non-resident borrowers.

Taux Annualisé Effectif Global or TEG / TAEG = Total costs of a loan

The rate includes the interests and the total expenses related to the attribution of a credit (bank and broker fees, insurance charges, surety or mortgage…). It measures the total cost of the loan. It must never exceed the quarterly usury rate set by Banque de France.

 

With special thanks to Eloïse.