In France, one of the main conditions for a mortgage loan is the existence and amount of a permanent statutory income of the borrower. Approval of the loan is also dependent on the purchased property and the conditions of the bank.
When getting a mortgage loan, non-residents have the same rights as the citizens of France. In France, the average interest rate on the mortgage is equal to 5.4% per annum. The fixed interest rate on a mortgage loan is now 3.5-5.4%, depending on the loan term, floating rate – from 3.3%.
However, after the crisis, the number of French banks willing to provide mortgages to foreigners has dropped dramatically, and the size of the down payment for non-residents rose from 30 to 50%.
Mortgage loan can be obtained as the purchase of real estate, and for its repair and reconstruction. On some real estate mortgage lending is not available. These include barns, stone houses, wooden buildings and sites with agricultural land.
Banks General Requirements
Every French bank uses own technique for the approval of the loan and the earch borrower considers individually. However, there are some general rules:
• For international buyers must make a down payment of 50% of the property value;
• Minimum loan amount equals to 30,000 euro;
• Credit is issued for a period of 5 to 30 years;
• Age of the borrower should be 21 to 70 years;
• The amount of the mortgage is calculated so that the monthly mortgage payments do not exceed 33% of the declared income of the borrower;
• The borrower must have a regular job or other regular income (for example, rent payments). The applicant must work for the same company for at least one year, if he has his own company, he need to confirm its existence for at least 3 years.
In addition to the amount of the mortgage loan and the down payment, the borrower must pay all indirect costs of buying a home (agency fees, bank files, etc.) that may be included in the loan amount.
The bank must be ensured in case the borrower can no longer pay the debt on the loan in the event of payment difficulties, so when signing the loan agreement also should be bought an insurance package. The cost of insurance depends on the degree of risk, the type of insurance, and sometimes on the value of the loan. As a rule, it is 0.5% of the loan amount.