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A guide to French mortgages

Updated: Sep 19, 2022


Learning the ins and outs of French mortgages is essential for anybody planning to purchase real estate there. Learn the ins and outs of getting one and paying payments.


Questions about housing financing may arise if you are considering a move to France to eventually purchase a property there. As an expat in France, you can feel overwhelmed by the prospect of applying for a mortgage and the associated costs.


Loan Brokerage France


In need of assistance buying a house in France? France Loan Brokers are here to assist you. Professionals on their team will research French banks to identify the most favourable financing options. Contact the mortgage brokers at Loan Brokerage France immediately to get the ball rolling on your purchase of a chalet in Chamonix or a cottage on the seaside in Biarritz.


Mortgages in France


You will likely require a French mortgage if you want to relocate to France and purchase a property there, if you plan to spend significant time in France, or if you plan to invest in French real estate. Multiple mortgage options are available from French banks and brokers to both domestic and international purchasers. However, in January 2022, government curbs on mortgage terms and loan amounts were enacted to lessen the possibility of individuals being overwhelmed by their debt.


In 2020, 31.4% of all French households owned a mortgage. This compares well to the EU average of 25%. Mortgage rates in France have been lower than in nations like the United Kingdom and Spain, despite growing home prices in France since 2016. They will have decreased from 2.4% in 2014 to 1.12% by the end of 2021.


Should you buy property in France?


It is no secret that France has a booming real estate market. It is not hard to understand why Europe's cheap borrowing rates are attracting foreign buyers.


Despite the wide spread of the COVID-19 epidemic, the French real estate market showed remarkable resilience. In 2020, over a million pre-owned houses were sold in France, down about 4% from 2019. There has been a recent uptick in interest in both preexisting and newly constructed houses. Since the epidemic, housing prices in France have climbed at their fastest pace in almost a decade, with a total year-on-year gain of 5.85% in 2021. While this is true for much of France, it is just 2.1% higher in the Île-de-France area. However, apartment prices in Paris have fallen by 0.2%, indicating a small dip.


Foreign investors still have few if any barriers to overcome when buying property in France because of the country's stable market, relatively strong laws, and openness to such investments. However, the property transaction costs may add up to ten to 15% of the purchase price and must be included. If you sell the property, you will also have to pay capital gains tax. This is in addition to the ordinary tax rate of 19% and the social security contribution rate of 17.2%.


The length of your stay in France may determine whether you should purchase a home or look for a rental. There may not be enough time to recoup your investment if you plan to stay for fewer than five years.


Who can get a mortgage in France?


Mortgages may be obtained from French banks by both citizens and foreigners. To apply, you will need to provide proof of income and make a down payment (more details on amounts below). Any person claiming to be self-employed must provide audited financial statements covering a minimum of three years.


Credit checks and age requirements are common practices among lenders. If you are above the age of 75, you can have trouble getting a mortgage in France. A certificate of commitment (pre-approval letter) from a mortgage lender is occasionally available in France, however, a mortgage loan is often only accessible in conjunction with a signed purchase agreement for real estate. This buys you a few months of negotiating power with the seller.


A protection insurance policy, such as a life insurance policy, is also required to qualify for a mortgage in France. This sum has to be equivalent to 120% of your mortgage's value. Borrowers over the age of 50 or those seeking a loan of more than €150,000 may be required to submit to a medical examination as well as provide proof of health insurance.


Getting a mortgage as a foreigner in France


Although French banks are often willing to give financing to international purchasers, they may impose other criteria. While most financial institutions would lend you up to 85% of the value of your home, if you are not a citizen of the European Union or the European Free Trade Association (EFTA), some may only lend you up to 50%.


The best mortgage rates in France are often reserved for French citizens, therefore non-residents may be required to create a savings account with a minimum deposit of at least 24 mortgage payments. For a €100,000 mortgage with a 1.5% fixed French mortgage rate for 10 years, for instance, you may be needed to commit around €15,000 in the capital.


French Mortgage Loan Varieties


France's mortgage sector has been around for a while, and it is well-versed in working with international purchasers. You may, however, discover fewer product variants than you would in other nations. Find out more about the many French mortgage options available here.


Interest-only mortgages


The use of interest-only loans is on the rise in France. A borrower who takes out this mortgage only has to make interest payments for a certain period. Investors who wish to rent out their homes often choose interest-only loans since buy-to-let mortgages are scarce. For whatever reason, international purchasers have a harder time getting this kind of financing.


This sort of mortgage may significantly lower the investor's monthly expenses since mortgage interest is deducted from rental revenue.


Fixed-rate and variable-rate French mortgages


Mortgage borrowers also have the option of selecting a fixed or adjustable interest rate. These typically have repayment terms between six and twenty-five years. The interest on a fixed-rate mortgage may be more than that on a variable-rate loan, but the borrower will have the peace of mind that comes with knowing their payment will not change.


A flexible mortgage is a unique kind of fixed-rate mortgage. While a fixed interest rate is guaranteed, this product gives borrowers the flexibility to choose their monthly payment amount. The lender typically determines the maximum and minimum payment amounts, although, in rare situations, payments may be paused for up to two years or raised by up to 30% for a faster payback. The costs for these extras might be higher, so you should only choose them if you know you will make use of them.


It might be difficult to gain a clear picture of long-term rates in France since variable-rate mortgages in the country are pegged to the three-month or one-year Euribor rates plus a buffer of 1% to 3%.


In France, you may get a mortgage with a fixed rate for a certain number of years (2-5 is common) and then switch to a mortgage with a variable rate after that.


Capped-rate mortgages


Non-French citizens may now participate in the burgeoning French mortgage market. Like a variable-rate mortgage, but with a maximum interest rate that cannot increase for the whole loan's duration.


Buyers who are concerned about interest rates rising too quickly and out of their reach like capped-rate mortgages. They often have significantly higher prices, however.


Bridging loans


Bridge loans are available to borrowers in France who are ready to make a purchase but must first wait for the sale of their current home. These loans are meant to be used as temporary measures. There is a two-year extension option, however.


In France, bridging loans are quite similar to mortgages in that you may often only borrow the same amount as you could with a mortgage (typically between 70% and 85% of the property's value). For the most part, this is limited to somewhere about €15 million. Rates are often significantly higher than those for a mortgage, however.


French mortgages for other purposes


In France, you may discover companies that provide many alternative types of mortgages, such as:


● Mortgage loans specifically to buy property to rent out and collect rent payments. Even if they are accessible, not all French financial institutions provide them. However, borrowing rates for non-resident purchasers are often greater than for residents.

● Mortgages on commercial property in France. These often have a higher down payment but will let you borrow more money.

● Large-scale home repair projects in France may often be financed via a renovation mortgage, which is offered by numerous French lenders. Funding is harder to come by if you want to acquire a rundown structure like a château and restore it to its former glory. In most cases, a normal home improvement loan will be sufficient for projects with a total cost of less than €150,000.

● If you have already acquired land in France and want to build a home on it, you may use a construction mortgage to do so. Similar to conventional mortgages, the maximum LTV is 80%.


Green mortgages in France


Sustainable architecture is trending in France, as it is throughout most of Europe. Financing for eco-friendly construction and repair projects hit €14.5 billion in 2015. Residents have been able to take advantage of interest-free eco-loans (eco-PTZ) of up to €50,000 for home energy upgrades thanks to state subsidies, tax benefits, and financing options.


Try out these 10 tips for living sustainably in France


French houses have come a long way in terms of energy efficiency, but there is still work to be done. Only 24.6% of French homes are considered "energy efficient," meaning they maintain a level of comfort within certain parameters. Privately held dwellings have a lower rate of this.


Provided you are looking to purchase a home in France and are concerned about the environment, you may be able to get a green mortgage if you find one that fits certain requirements. Several French financial institutions, such as Groupe BPCE and the Caisse des Dépôts Group, have joined a European Union-wide green mortgage plan that provides preferential financing for the purchase of environmentally efficient homes. Before committing to a mortgage, it is a good idea to contact your potential servicer and inquire about any available discounts or special programmes.


Mortgage rates in France


Interest rates on mortgages in France depend on several factors, including:


● Amount you borrow

● Loan-to-value (LTV) rate

● Mortgage type

● Duration of mortgage

● Property type

● Your residency status


In recent years, mortgage rates in France have been much lower than in most of Europe. They have dropped dramatically over the previous decade, from an average of about 4% in 2021 to 1.14% in December 2021. The Banque de France forecasts a small increase, with rates averaging 1.17% by April 2022. In March of 2022, mortgages with fixed rates averaged 1.14%, while those with adjustable rates averaged 1.22%.


How much can you borrow for a French mortgage?


French mortgage lenders and banks generally lend between 70% and 85% of a property's worth (the LTV rate). The typical LTV for borrowers from outside the EU/EFTA is between 50 and 75%. French nationals and permanent residents may be able to borrow up to 100% in specific cases, albeit this is often contingent upon their opening a savings account with a French financial institution.


How much you can borrow depends on your income. Mortgage payments, other monthly expenditures, and other monthly rentals combined cannot exceed 33% of the borrower's gross monthly income in France. Some examples of revenue that banks will accept are:


● Salaried income

● Dividends with a three-year track record

● Other regular investment income

● Business income

● Pensions income


Existing rental income from other properties


Statements from your firm detailing your revenue over the last three years are required whether you are self-employed or a freelancer.


Mortgage lenders in France often have a minimum loan amount before they would give funding. This number normally falls in the range of 50,000 to 100,000 Euros, while certain lenders may set a higher cap. It might be greater for those who are not EU or EFTA citizens.


Online mortgage calculator

These online resources are available at no cost and may help you determine how much money you can borrow and how much you will need to pay back each month as a loan payment:


French Mortgage Direct


Mortgage in France


How to apply for a mortgage in France

The mortgage application process in France is comparable to that in other nations.


It may be worthwhile to check with many mortgage companies to see which one offers the most competitive interest rate. Numerous French financial institutions provide mortgages to international clients purchasing property in France. As a bonus, the mortgage industry has several specialists that provide products and services tailored specifically to the needs of expats.


Once the buyer and seller have signed a preliminary sales agreement, the bank is satisfied that the buyer can afford the loan (according to French rules), and the value of the property justifies the loan, the bank will make an official mortgage offer.


The mortgage offer will be sent to you when you have completed the application form and agreed to the life insurance coverage. Please allow at least 10 business days (but no more than 30) before signing and accepting the offer. At last, the lender will have the mortgage agreement notarized so that the deeds of sale may be prepared. The whole procedure, from signing the sales agreement to taking possession, usually takes around two to three months.


To apply for a mortgage in France, you will typically require the following:


● Application for a mortgage, all fields filled out

● Photocopies of the borrower's passports

● Proof of income (self-employed individuals need audited financial statements for three years)

● Bank account details, usually with a bank operating in France

● Bank statements for the last three months

● Proof of current address, for example, utility statements or a rental agreement

● Statement of assets


Completed preliminary sales agreement


Estimates or invoices from licenced French contractors, together with copies of their insurance certificates, are required for any construction or renovation work.


Construction of improvements on the property requires the following: a building licence, the construction contract and drawings, and a property title or preliminary sales agreement for the site.


If a remortgage or equity release is being used to fund the purchase of the property, the title deed or loan deed will include a detailed repayment schedule.


The French Banking Institutions that provide Mortgages to Foreign Nationals

Mortgages are available from a wide variety of French and foreign financial institutions. Some of them are:


● HSBC

● BNP Paribas

● Société Générale

● CIC


Mortgage brokers offering mortgages to expats


A mortgage broker in France may assist you in locating competitive rates and processing your application. For information about mortgage brokers who may work with foreign nationals, please see our Directory.


Help with securing a French mortgage


French mortgages may be available via government programmes or subsidies for those who need financial assistance. The "interest-free loan" (Prêt à Taux Zéro - PTZ) is by far the most frequent of these. Those who are purchasing a home for the first time or who have not been homeowners for the previous two years are eligible for this. If you are unable to work due to a handicap and have a Carte mobilité inclusion (CMI) card, or if you require a mortgage to repair a home that was damaged in a natural catastrophe, you may be eligible for a PTZ.


Loans from PTZ businesses also have to meet revenue and asset requirements. Location (divided into four zones: A, B1, B2, and C) and the number of tenants influence the minimum annual income required to qualify for reduced rent. Here is where you can figure out what benefits you are eligible for (in French). You will need to use your own money or get another mortgage to cover the rest of the cost of the property you want to buy with a PTZ.


Other support available includes:


● Workers at private enterprises with 10 or more workers are eligible for 0.5% interest on employer-provided mortgage loans (prêt action logement). A maximum loan amount of €40,000 is available to you.

● Individuals who fulfil the PTZ's income criteria may also apply for social accession loans (prêt d'accession sociale), which are designed to help individuals with lower incomes get into the housing market. Instead of eliminating interest, however, it is limited.

● The French government offers high-interest savings accounts called comptes épargne logement (CEL) and plan d'épargne logement (PEL) specifically for those who are putting money away to pay off a mortgage.


Mortgage costs in France


The cost of a mortgage in France may vary widely depending on a variety of circumstances, but it is often more for pre-existing homes than for brand-new construction. When purchasing real estate in France, you may anticipate spending between 10-15% of the purchase price on taxes and insurance alone. Among the mortgage-related costs are:


● Costs associated with arranging and processing a mortgage loan, usually amounting to less than 1% of the principal borrowed (plus VAT)

● Typical notary costs are 2-4% of the purchase price for a brand new home, and 6-8% for a home that is older than five years (plus VAT)

● Lenders may insist on a valuation study, which typically runs around €250.


Taxes and tax relief on mortgages in France


When purchasing real estate and taking out a mortgage in France, you will be required to pay property tax (taxe foncière). The calculation is a function of the yearly rental value times a percentage determined by the neighbourhood's communal government. A typical rate for a principal residence is 1%, whereas the rate for a vacation property is 3%.


Some homeowners may qualify for a tax break or exemption:


● Notifying the tax authorities within 90 days of completion entitles you to a two-year exemption on new construction and any new construction work done to existing properties.

● If you do energy-saving renovations on your home, certain municipalities may grant you tax breaks for up to five years.

● A property tax exemption or relief may be available to those who qualify due to age, disability, or low income.


Other taxes on mortgages and properties include:


● Payable on homes worth more than €800,000, the real estate wealth tax (impôt sur la fortune immobilière - IFI) begins at 0.5% and increases to 1.5% for homes worth more than €10 million.

● A notary's costs often include stamp duty (droit de mutation).

● The combined total of the capital gains tax (at a rate of 19%) and social charges (at a rate of 17.2%) on any profit made from the sale of a home might be as high as 32%.

● Payable by homeowners to fund municipal services, the housing tax (taxe d'habitation) is scheduled to be eliminated by 2023.

● Empty property taxes (taxes sur les logements vacants - TLV/THLV) -12.5% of annual rent, increasing to 25% after the first year

● Some taxpayers may qualify for numerous tax exemptions and credits (in French). If you rent out your home, you may be able to deduct mortgage interest from the taxes you owe. These exemptions may be used to reduce French inheritance tax as well.

● If you use the property as your primary home, you may deduct 30% off the IFI valuation.

● Tax legislation in France may be complex. It is thus recommended to consult a financial advisor while organising your taxes in France. You may find French tax consultants in our directory.


Property insurance in France


To safeguard their investment, most French mortgage lenders require their borrowers to get life insurance policies that pay out the loan sum in the case of the borrower's death or permanent disability. It is common practice among financial institutions to additionally insist on homeowners insurance. Although this protects the structure itself, many choose broader multi-risk insurance that also covers their belongings and any obligation they may incur to others.


Construction insurance coverage that covers flaws for the first 10 years is highly recommended for anybody purchasing a newly built house or undergoing major renovations. Numerous all-hazards policies contain this feature.


Here are several French insurers offering homeowners' policies:


● Luko

● Lemonade

● Allianz

● AXA

● BNP Paribas

● Covéa

● Crédit Agricole

● Groupama


Mortgage repayments in France


Mortgage payments in France are typically made monthly and include principal and interest. On the contrary, with an interest-only mortgage, you will only be responsible for paying the interest throughout the loan's introductory term. Mortgage payments typically begin the month after a house is purchased. There are a few loan companies that will let you pay nothing except interest for a certain length of time (often 6–36 months).


Ask your mortgage servicer about any fees or penalties associated with paying off your loan early. Some lenders charge an early termination fee while others don't. In most cases, this is true for mortgages with a set interest rate. There is a maximum charge of six months' interest or 3% of the principal amount, whichever is greater. Penalties for defaulting on a mortgage with a variable interest rate are unusual. In the case of death, unemployment, or a sale of property that is contingent on a job transfer, lenders are prohibited from imposing prepayment penalties.


You should get in touch with your French mortgage lender right away if you run into trouble making your payments. Lenders are often generally flexible and may even be ready to temporarily suspend payments. Indeed, under some conditions, they are obligated to (for example, a death or sudden unemployment). Apply for help from the Over-indebtedness Commission (Commission départementale de surendettement) if you are having financial troubles and might lose your house. The commission will take action to stop the repossession process on your behalf. There is additional information about the application process available on the website (in French).


Refinancing a mortgage in France


You may refinance your mortgage in France and use the proceeds to pay down your current mortgage or to buy another real estate. Although this is more widespread in the UK and other nations, it is still quite uncommon in the US. As a result, the French market has fewer remortgage options than many other nations, and the hefty costs may outweigh any advantages.


There are several reasons to consider remortgaging, including access to lower interest rates and the ability to use the funds from the sale of your home toward other investments (such as repairs or perhaps another purchase). However, you should budget for expenses like:


● Soaring rates of interest. Many financial institutions charge borrowers who are attempting to remortgage a higher interest rate on their new loan.

● Mortgage refinancing sometimes comes with more favourable loan-to-value (LTV) ratios from lenders, such as 75% vs 85%.

● Costs associated with loan administration, such as notary fees, may range from 3% to 5% of the principal amount borrowed.

● Many mortgage lenders may charge you extra if you pay off your loan early.


Useful resources


● Service-Public is the French government's online portal for mortgage loans (in French)

● The French government's housing guidance and information clearinghouse is known as the "Agence Nationale pour l'Information sur le Logement," or "National Agency for Housing Information" (ANIL for short) (in French)

● If you need the services of a French notary, you may find one in your area by visiting the official website of the French notary association, which is located at Notaires.fr.

● Search for a European notary who speaks your language using this directory.

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