French Mortgages
Using a mortgage to hedge the strong euro
With the continued strong euro and weak dollar (1.49 USD for 1 euro at the time of writing), we are seeing many smart US customers thinking twice about buying property in cash, and taking an immediate hit on the exchange rate. Several customers have contacted us asking how a French mortgage can help people with their income and savings in US dollars. There are several options available :
First, know that (subject to your personal situation), obtaining a euro mortgage with a French bank for your French property purchase is possible. Taking an example of a 400 000€ property purchase, you could borrow 320 000€ instead of paying cash. With a flexible mortgage product that allows you to repay the loan early without penalties, you can then choose your moment to move your US dollars into euros when the exchange rate is more favorable. Of course, there are fees and interest charges to consider in such an operation but depending on where you feel the US dollar / euro exchange rate will go over the next couple of years you could save significantly.
For customers buying larger properties, we can also provide a solution to lend up to 100% of the property price. This is possible if you are willing to place an investment under management with the bank, or one of their chosen partners. This money can also be held in US dollars, so again you do not get hit with an exchange rate. You can then choose to pay down the mortgage without penalties when you feel it is appropriate. Taking the 400 000€ property purchase above, this would mean you place 100 000€ (or US dollar equivalent) into a managed fund (which can only contain up to 20% stock market exposure) and this fund is used as additional security for the 100% mortgage. The capital you may generate on the savings can then be used to pay down the mortgage.
If you are planning to generate rental income from the property, you are then matching your income and your mortgage payments in the same currency and you exchange rate risk is limited to the difference between your mortgage payments and rental income.
When you are transferring money to euros, remember also that using a currency broker can save you significant money when compared to your high street bank. We would be happy to recommend a trusted currency broker to you.
Outlook for European Interest and Inflation Rates
Rising inflation rates across Europe, and notably in France, with a 2.3% increase in February alone, are encouraging the European Central Bank (ECB) to increase the interest rates in order to counter these unanticipated levels of inflation. The bank shifted its year-long and its 2012 overall inflation projections.
The interest rate increases are aimed to signal to investors that there is a focus on controlling inflation throughout the Eurozone. The ECB is tightening economic policy as the economy rebuilds and expands. The ECB Governing Council members expressed that monetary policy as it stands is too “accommodative”, thus necessitating the higher interest rates. Further, the rising interest rates are an indication that the economy is strengthening to be able to withstand the shifts in investment that may occur as a result of the changes. Additionally, the increased interest rates are an emphasis on the bank’s credibility.
The problem of balancing stronger economies, like Germany and France, which recovered the most quickly from the financial crisis, with the countries that have required aid in the form of foreign loans or World Bank bailouts remains a challenge for the ECB.
The IMF last week increased its growth prediction for the euro region to 1.6% in 2011 and 1.8% in 2012. The ECB is also trying to emphasize that while the euro’s exchange rate dipped slightly in mid-April with announcements over Greece’s bond rankings they are confident that the sovereign debt crisis, in terms of those countries requiring bailouts, is a restricted situation.
The primary policy goal of the ECB this year is inflation control. The ECB has not explicitly indicated whether its Euribor rate will indeed increase to 1.75%, a further increase of 0.5%, but there are indications that such increases are not out of the question. There is an expected raise in the interest rate by 0.25% each quarter through the end of 2012 so that the interest rate at that juncture would be 2.75%.
According to Business Week, investors in the European market can expect that the bank will be beginning to decrease its supply of liquidity to banks and to perhaps cut down on its bond purchase program as these two policies are not in line with the policies towards lessening dependency on the ECB by member countries.
French Ski Apartment For Sale
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Paris apartment purchase
"The difficulties our mortgage broker overcame and the money they saved us were especially impressive.
“It was like working with a US bank down the street!”
I am French and understand the difficulties of French institutions. After spending 3 years trying to get French banks (including mine) to respond to me and consider my US income for a French real estate loan, I was fortunate to discover France Home Finance on the web.
Financing a Pied-a-terre in Paris
"Do your homework and let France Home Finance take care of the most integral part of the process - the money!
France Home Finance – When I think about France Home Finance and my experience with them, one word comes to mind… STELLAR!
“...above and beyond her responsibilities…”
Thank you France Home Finance for providing us with exceptional service and support throughout the course of purchasing property in Paris
Paris apartment purchase for Patricia in Hawaii
"I can't thank you enough for all your assistance.
Dear France Home Finance, Throughout this French property purchasing experience, I must say that you were the most efficient and pleasant part of it all.
French equity release for renovations
"France Home Finance immediately understood exactly what we wanted to do and promptly presented us with several loan options. They helpfully explained the mechanics, risks and implications of each product.
Paris Buy to let apartment mortgages
"France Home Finance… made the whole process so easy and painless that we eventually decided to buy not only one but two apartments!
Annie, NY, Paris apartment purchase
"France Home Finance was the reason I was successful in realizing a dream to buy an apartment in France.
They are a wonderfully professional and customer-service oriented company.
Glossary of French Mortgage Terms
The following terms are common mortgage terms used when dealing with French mortgages. For reference, accomodating each definition is the English name for the term.
EURIBOR (EURopean InterBank Offered Rate)
English Term: Prime Rate
The EURIBOR stands for the European Interbank Offered Rate, which is a daily reference rate based on the average interest rates at which banks offer to lend unsecured funds to other banks in the European interbank market. Mortgage payments are tied to this index outside the control of the lenders with predetermined adjustments of the interest rates at specified intervals. Unexpected large adjustments can have significant impact on borrowers with variable rate mortgages, as their monthly mortgage payments may suddenly increase by large amounts.
English Term: Amortization
This is a mortgage loan that offers monthly repayments to cover both the interest and principal payments. Each payment is composed of a fraction of the debt capital, interest payments, and insurance premiums, if applicable. The total loan amount is amortized over the duration of the loan, usually around 20 to 30 years. This type of repayment does not require a large payment for the outstanding principal on the maturity date, which is required for interest-only mortgage repayments.
Mortgage Calculator
English Term: Amortization Calculator
An amortization calculator is referred to as a “mortgage calculator” in
Mortgage Insurance
English Term: Private Mortgage Insurance (PMI), or Lenders Mortgage Insurance (LMI)
In
Price per Square Meter
English Term: Price per Square Feet
Properties in
Variable Rate Mortgages
English Term: Adjustable Rate Mortgages (ARM)
An adjustable rate mortgage (ARM) is called a variable rate mortgage in
Credit Scoring System
Unlike the American credit scoring system, assigning credit ratings to customers is not legal in
Paris leaseback mortgage
"As we say in New York, way to go! I would recommend France Home Finance highly to anyone. My only wish is that they open offices in other countries!
Testimonials
France Home Finance would like to thank its loyal clients for their continued confidence in our team. This section is dedicated to a compilation of what the North American clients had to say about our services. Many more testimonials are available on our main site.
The testimonials are grouped by the type of property purchase or financial operation that the clients were involved in. Please click on the categories in the column at the left side of your screen.
Currency Converter & Rate Watch
Our partnership with our trusted specialist foreign exchange broker, Currencies Direct, provides you with two useful tools that will help you with exchanging your currency. Whether you want to move money to a French bank account for the down payment or pay your regular monthly mortgage payments, Currencies Direct is here to help.
To gain access to Currencies Direct's FX Converter and FX Rate Watch, please click here.
Resources
Here you will find various resources that you may need throughout the mortgage application process.
As an interested American buyer, you might find that the French mortgage process is very different and more complicated than the processes in the United States or Canada. Therefore, we have come up with a list of common French mortgage terms in order to help you better understand the French process. Please click on "Glossary of French Mortgage Terms" to view this list.
French Mortgage Calculator
Just like an amortization calculator, which you may have used before in the United States or Canada, a French mortgage calculator helps you estimate your monthly mortgage payments and down payment costs. All you will need to enter into the calculator is the purchase price of your property, the amount of the loan, the duration of the loan, and its interest rate. Then the calculator will determine either your monthly payments or your estimated down payment cost.
Please click here to access your mortgage calculator.
How to Apply
This section will discuss exactly how to apply for your French mortgage. Click on the links on the menu tab to the left for more information.
Our French Mortgage Rates
Before you make a decision about which type of mortgage product you would like to pursue, it's important to know the current fixed and variable rates on the market. France Home Finance keeps you updated with these rates so you always stay on top of market changes. Click here for a list of the best French mortgage rates for classic purchases, leasebacks, second home & buy to lets, and equity release & remortgages.
Essential Documents Needed
Here is a list of all the essential personal and financial documents that you will need to submit for your French mortgage application:
Personal Details
- Copy of borrower(s)' passports
- Copy of marriage certificate or divorce certificate, if applicable
- Copy of birth certificate or driver's license, if not married
- Copy of utility or tax bill clearing showing name and address
Financial Details
- Copy of account statements such as savings plans, stock portfolios, life insurance, etc.
- Copy of last 3 consecutive months' bank statements for all bank accounts, clearly labeling each revenue deposit, loan debit, or transfers out
- Copy of last month's statement for each credit card you are actively using
- Proof of all other loans, such as car loans and personal loans, if applicable. You must show the monthly payment and remaining capital outstanding for each loan
- Proof of each rental income with a copy of each rental contract, if applicable
Employment Details
If salaried by an employer:
- Copy of last 2 years' official earnings statements (P60s or W2) for all borrowers
- Copy of last 3 consecutive full months' (90 days) salary slips for all borrowers
If self-employed:
- Copy of last 3 years' company accounts
- Copy of last 2 years' personal tax statements of declarations
- Signed and dated letter from a certified accountant confirming income, net profits, salary, dividends, etc. for the company
Other Forms
- Mortgage Application
- Copy of signed purchase/reservation contract
- Life insurance questionnaire
- French bank account application form
The quicker you provide all of these forms to your mortgage broker, the quicker you will be able to receive your mortgage quote.
Mortgage Application Process Breakdown
Below is a simple 6-step process to applying and securing your French mortgage. Please refer to a detailed breakdown of the 6 steps on our main website here.
1. Get pre-approved to borrow in France
2. Send in your French mortgage application file
3. Open a French bank account
4. Accept your French mortgage and life insurance offer
5. Obtain French property insurance
6. Complete the act of sale
French Mortgage Approval in Principle
French banks have a very different approach to underwriting compared to other countries; therefore, it is necessary to understand your complete financial situation to give you an accurate analysis and know which banks to quote. Based on the property you have chosen (or are looking at) and your personal financial situation, our French mortgage brokers will help you choose among all the options to find the most advantageous product for you. This goes beyond just looking for the best mortgage rate as there are many other factors to consider when choosing the right financial product.
Please fill out our French mortgage pre-approval application as completely as possible. This will allow our mortgage brokers to analyse your request fully and provide an accurate response.
French Mortgage Services
At France Home Finance, we strive to make every aspect of the French mortgage application process easier for our clients. Therefore, we provide numerous mortgage services that will assist you along every step of the mortgage process, from start to finish. Here is a list of the main services we provide (please click on the links on the menu tab to your left for more details):
- Buying a French Property
- Finance Your Property
- Refinancing Your Property
- Equity Release
- French Mortgage Brokerage
- Insurance Brokerage
- Finding a Notary
- Legal & Tax Services
Legal & Tax Services
LEGAL ADVICE:
Obtain sound advice in English on inheritance, capital gains and a myriad of other French legal topics through France Home Finance's partners. Clients often ask our opinion on matters such as structuring a property transaction for efficient inheritance, French contract clauses or capital gains treatment in France. Fortunately, we have come across a number of French legal professionals over the years via our clients, and can connect you with those that received positive recommendations so that you can find the expert French legal advice in English that you are seeking.
TAX ADVICE:
Tax matters can be complicated enough in your home country and language, and even more complicated in a foreign country. If you are seeking advice on French taxation, we have partners who can help.
Insurance Brokerage
Need French home or life insurance?
Finding a Notary
Need assistance with finding an English-speaking French notary who is professionally trained in acting upon French legal affairs? Look no more.
French Mortgage Brokerage
France Home Finance is here to help you find the best French mortgage on the market for your French property, leaseback, remortgage or equity release.
We are a fully independent mortgage brokerage offering specialised expertise on French mortgages and staffed by friendly, bi-lingual advisors.
Did you know that it's possible for foreigners to take a French mortgage for French property? Over the years, we have helped many international buyers by providing custom French mortgage solutions to finance their move to France or the purchase of their dream French holiday home.
For our investor clients, we understand that when buying a French Leaseback or Buy to Let, you are looking for the minimum cash outlay and least shortfall between your rental income and mortgage payment. France Home Finance has strong relationships with the top French developers to ensure a coordinated purchasing process for you.
Remortgage both with and without cash out and French equity release mortgages have become increasingly popular. The rules and regulations for these products are constantly changing therefore specialised advice is needed. France Home Finance advisors will take the time to understand your project and find the appropriate French mortgage product to achieve your goal.
We're ready to help you. Request your free, no obligation mortgage quote now.
Equity Release
Interested in performing EQUITY RELEASE on your French property?
Remortgaging your French Property
If you are already the owner of a house or apartment in France and have taken out a French mortgage, you can take advantage of low french interest rates by refinancing your existing mortgage.
Depending on the terms of your existing French mortgage, it may be more or less advantageous to look at a remortgage.
There will be transaction costs associated with the operation which can be broken into three areas :
1) Pre-payment penalties on your existing French loan
It is usual for banks to apply an early repayment penalty if a competitor bank is refinancing your loan. Your original loan offer will detail the charges applicable but the maximum that a bank can apply is 6 months interest on the amount outstanding, not exceeding 3% of the capital outstanding.
2) French notary costs
In most cases the French notaire will need to change the charge (lien) registered on the property, from the old bank to the new bank. This will typically cost 1.5% of the new loan amount
3) Bank and Broker fees
Depending on your specific project and the bank chosen, these dossier fees will vary but count on around 1.5% for estimation purposes.
Note that the new bank will still ask you to provide documentation of your personal finances and they will check that you qualify for the mortgage according to their underwriting rules.
Financing Your French Property
Interested in securing a French mortgage for your property?
France Home Finance provides you with the services necessary to secure the right mortgage product for you. Please read the following six steps to understand the basic mortgage process in France, and then click on "How to Apply" at the top of your screen to get started with the details.
1. Get pre-approved to borrow in France
2. Send your French mortgage application file
3. Open a French bank account
4. Accept your French mortgage and life insurance offer
5. Obtain French property insurance
6. Complete the act of sale
Why France Home Finance?
Experience - Expertise - Excellence
We understand that when looking for your French mortgage, you want the best deal on the market with the best service.
FRENCH EXPERTISE
The marketplace for international borrowers in France is constantly changing. Unlike other brokers claiming to offer in depth mortgage expertise on many different countries at once, France Home Finance is 100% focused on French mortgages.
EXPERIENCE AND RELATIONSHIPS
Our independent brokerage team has years of on the ground experience in France and longstanding relationships with more than twenty leading French lenders. Due to the high volume of French mortgages transacted each year, France Home Finance is able to obtain key account rates and exclusive products for you.
POWERFUL TECHNOLOGY
France Home Finance's proprietary Intelligent Quote technology will match your personal financial data against the rules and regulations from our banking partners for more than 65 mortgage products. Constantly up to date for maximum accuracy, we perform over 9000 eligibility checks to identify the number of French mortgage products that you personally qualify for. Intelligent Quote looks at the global cost of each mortgage including bank filing fees, life insurance, interest rate and bank margin to ensure you obtain not only the best French mortgage interest rate, but the best overall deal.
BILINGUAL AND BICULTURAL
You don’t need to worry about misunderstanding the French mortgage process due to the cultural differences and language barrier. Our experienced bilingual advisors will walk you through the process step by step and clearly explain all the terms and conditions in English.
COMMUNICATION AND DEDICATION TO SERVICE
Save time, money and frustration. Having worked in French banking, we know how to navigate the French system to shield you from the potential missed deadlines, backlogs and lack of communication between the many parties involved. You will have peace of mind because at France Home Finance, we understand the concept of excellent customer service and you are our number one priority.
About Us
France Home Finance is a French mortgage expert that specializes in French mortgage services for international buyers looking to purchase and/or invest in French real estate.
As a leading mortgage broker that is perfectly fluent in both English and French and truly multi-cultural, the France Home Finance team focuses on three specific things: living in France, investing in France, and taking excellent care of our clients. Our mission is to provide the best independent French mortgage service to the world through timely and efficient processes.
Our privileged bank relationships with many large french banks help us to secure the best mortgage terms for our clients.
History
France Home Finance was founded in 2004 by a team of British, American and French bankers with the mission to provide the best independent French mortgage service to the world.
The French mortgage market is as vast and varied as the diversity of our global clientele. Rather than offer basic mortgage products across many countries, our interest lies in being at the forefront of French mortgages and using technology to be able to offer the best deals, presently transparently, up to minute, every day.
Years of experience working with thousands of clients, we have learned that while the French language barrier can pose a challenge to our international clients obtaining French mortgages, the most difficult hurdles come from cultural barriers and differences in processes.
We make it our business to understand what you expect the French mortgage application process to be and then clearly explain in advance how it will differ in France to ensure a hassle free process for you.
We have also learned that relationships are as important in France as numbers. So we invest time to maintain close ties with our French lending partners and work hard to negotiate exclusive offers and develop new products tailored to the needs of our clients.
After all these years, we remain convinced that France is the ideal place to purchase property. France is unrivalled in it's stunning landscapes and coastlines, solid infrastructure, and steady tourism. The transparent and well regulated legal system ensure that property investors are protected. And the cafes, markets, wine and cuisine remind us why living is an art.
We understand why you are investing in French property and we agree with you!
Buying a French Property
Interested in buying a French property?
Doing your research beforehand to familiarize yourself with common French property and mortgage terms and the processes involved will make for a better experience. The process is not the same as a US property purchase but as a premier French mortgage broker, France Home Finance is here to help you better understand this process.
Here is a simple 6-step process to inform you of what it takes to complete a property purchase in France.
1. Determine your budget
- If you are considering a French mortgage to finance part of your purchase, you should obtain a decision in principle from us so you better understand exactly what your budget is when you make your offer for the property.
2. Find your French property and make an offer.
- After you have a rough idea of what your budget is, you should contact an experienced real estate agent to help you find the property you are looking for. If you are buying a Paris property be aware that there is no multiple listing system (MLS) equivalent in Paris and you will find the same property listed in different agencies, at different prices. Paris Real Estate Agencies tend to focus on their immediate surrounding areas and it can be a time consuming experience to hunt around these agencies. We recommend using a Paris Property Search agency such as Flat Hunter to help you find your property. When you find your property you will make an offer to the seller and the agency or your search agent will lead the negotiations between the buyer and seller until you agree on a price.
3. Select a French notary to represent you
- A French notary is a publicly appointed official who is responsible for correctly executing contracts in an impartial manner. You can use the seller’s notary to complete the sale, but you also have the right to find your own to represent you at no additional expense. We understand that you may want to find an English-speaking French notary to represent you, and we provide a search service to help you find the perfect notary. If you are using our mortgage services for a Paris property purchase we will put you in touch with an excellent English speaking Notaire that is very familiar with our processes.
4. Sign the preliminary purchase agreement
- This agreement, also called the "promesse de vente" or "compromis de vente", binds the seller to the sale upon signing; however, the buyer has a 7-day period of reflection in which they can opt out of the deal without penalty if he or she wishes. At the signing, the buyer makes a deposit of 5-10% of the purchase price into a safe account regulated by the French notary, just like an escrow account. This deposit is used towards the down payment and closing costs. The notary is then in charge of dispersing all the funds to the correct parties.
5. Arrange your French mortgage
- At this stage of the process, you will need to search and secure your French mortgage. If you opted for a "clause suspensive" in your purchase contract, you will have 30-45 days to obtain a written french mortgage offer or if no finance is available, show at least two French bank rejections. Fortunately, France Home Finance is here to assist you with this process. For more information, see our "Financing Your Property" page on this website for more information.
6. Complete the act of sale
- When you have accepted your French mortgage and sent a copy to your French notary, you will need to set a meeting for the signature of the final act of sale. You can give signing power to a third party if you are unable to be in France for the signature. Once all taxes have been settled, the title of your property will then be posted to you within 3-6 months after the act of sale. The Notaire will also finalise the accounts and usually send you a check for any surplus money.
Spotlight 1
Your French Mortgage is waiting
Did you know that as an American citizen or resident it is possible to finance property in France with a French mortgage?
Have you always dreamt of buying a Paris apartment but not sure where to start?
France Home Finance understands what it takes to secure french mortgages for americans purchasing property throughout France. We are here to assist you with obtaining the best possible French mortgage for your French property! Through our trusted and privileged relationships with our large selection of French banks, we can provide you with the most accurate and best deals to finance your new property, leaseback, or buy-to-let property in France.
The founder of France Home Finance, Tahminae Madani, was born and raised in Wisconsin USA and, after working in various finance jobs taking her to many different countries, she moved to France and subsequently founded this independent french mortgage brokerage in 2004.
Whether you're looking for a simple financing, remortgaging, or equity release on your French property, France Home Finance is here to guide you along the process of applying and securing a French mortgage so you can spend your time and effort on other important things, such as getting ready to move into your new property or to rent it out to tenants. Using our comprehensive technology system, we determine which products fit your needs best based on your financial situation. We then provide you with the best possible mortgage rates and ensure that you get only the best deals offered in today's competitive market.