Your 12 Easy Step French Mortgage Guide
Step 1 You find a property in the south of France and intend to finance the purchase with a French Mortgage using no less than a 20% down-payment from your own funds – Remember the total fees payable to the Notaire can be in the region of 7% – 10% of the purchase price. The whole process of completing a mortgage on a French property from the moment you sign the compromis de vente takes around 60 days. Consider appointing your own English-speaking notary to co-ordinate the transaction.
Step 2 You will sign the Compromis de Vente (sales agreement), ensuring that it contains the ‘Clause Suspensive‘ stating that the purchase is dependant on obtaining of a French Mortgage. If the bank declines the loan then all monies including the deposit will be returned in full to the buyer. There will be a time limit for applying for the mortgage stipulated in the ‘compromis de vente’. Normally this is around 30-45 days. The date set for the signing of the title deeds of the property is set around two months after signing the compromis de vente. This is the time it takes for the notaries and the authorities to take care of all the due diligence procedures associated with transferring the title deeds of a property in France. It is important that the financial details of the operation; the loan amount, the name of the lending bank, the interest rate and the length of the loan are all defined in the compromis de vente to avoid problems later. In many cases we suggest you fax a copy of the compromis de vente to French Mortgage Xpress so that we can ensure that the financial details of the purchase are correctly defined to protect your own interests. If you do not intend to obtain a loan, you are expected to write in your own handwriting that you intend to give up your rights under the law. This is not always wise, should you subsequently decide to obtain a loan, and fail, then you will lose your deposit. French Mortgage Xpress will describe the different types of French Mortgages and loans available to you and will help you to select the best type of loan based on your circumstances and the French banks lending criteria. French Mortgage Xpress will send you a quotation to give you an indication of your monthly payments and will ask you to provide some further basic financial details. At this point you may wish to appoint your own notary to oversee all aspects of the transaction. Contrary to many reports, the appointment of your own notary does not incur any extra costs. French Mortgage Xpress can recommend English-speaking notary services at no extra cost to the purchaser. Be wary of signing a compromis de vente without an escape clause in the event of your mortgage not being approved.
Step 3 You complete the lenders application form provided by French Mortgage Xpress for the loan, along with a medical questionnaire and send it to French Mortgage Xpress together with photocopies of the supporting documentation. Note:The original application form and medical questionnaire will need to be returned along with photocopies of all of the other documentation required.
Step 4 A French Mortgage Xpress adviser will confirm receipt of all the documentation and advise you of any documents still to be provided. French Mortgage Xpress will then pass the complete file on to the lending bank for a “first reaction.” French Mortgage Xpress at this point can arrange the opening of a French bank account.
Step 5 The lending bank will provide French Mortgage Xpress with their first reaction. This usually consists of a conditional loan approval subject to obtaining any missing documents from the original list. French Mortgage Xpress will immediately forward this report to you.
Step 6 You supply missing documentation (if any) to French Mortgage Xpress, which is passed on to the French bank. The file/dossier once complete, then proceeds to the French bank’s lending committee for final approval.
Step 7 At the same time the bank will authorise an independent valuation of the French Property that you are purchasing. It will be necessary to coordinate with the owner/real estate agent for the independent valuer to access the property. Note: Make sure French Mortgage Xpress has the contact details of all the relevant parties in the transaction in order that we can short-cut any potential problems.
Step 8 Within 10 days of receiving all the required financial information, the lending bank will be able to give a decision on your French Mortgage loan application. Often the response is “Yes”, subject to life assurance. Note: Talk to your Independent Mortgage Broker to advice you on putting this policy in place.
Step 9 Once all the medical formalities have been taken care of, the French Mortgage offer will be issued and sent by post to your normal postal address. A duplicate will be sent to your notary so that they can start drawing up the final documents for the title deeds. The notary needs a copy of the loan agreement before he/she can draw up the final documents. At the same time your Notary be able to calculate all the fees including the land registry fee which is a percentage of the loan amount. The notary will be able to tell you the exact amount of these fees and you should be ready to pay them by a French bank cheque or transfer them from your domestic account on or before the day of signing. Note: Make sure your local GP completes the medical forms provided by the bank. Most medical officers representing the banks will not accept medical information more than three months old.
Step 10 Once you receive the loan offer contact French Mortgage Xpress and we will give you precise instructions on how to complete the acceptation letter and answer any questions you may have about the loan. Remember, under French law, there is an 11 day cooling off period before you legally accept the French bank’s mortgage offer.
Step 11 Once the loan acceptance letter has been returned to the French bank, the bank will transfer the funds you have borrowed to the notary, usually in the 48 hours preceding the date set by your notary for signing the final act. You will arrange for the transfer of the down payment plus notary fees to the notary’s account. The notary is responsible for informing you of the precise sums. Make sure you leave sufficient time for the funds to arrive in the notary’s account; especially if the funds are being transferred from abroad. You may wish to use the services of a specialist foreign currency provider to obtain the best exchange rate. French Mortgage Xpress can advise you on this issue.
Step 12 Congratulations! Finally you sign at the notary’s office. Be prepared for a minimum of two hours at the office. Usually a translator is provided for a small fee, payable to the notary by a French bank cheque on the day. It may also be possible to sign by proxy; you should set up this arrangement (if required) well in advance with your notary. Note:Your first mortgage repayment will come from the direct debit you have set up with your French bank. Within six weeks the bank will also draw down any bank arrangement fee as stated in the loan offer (usually between 700 and 1200 Euro). You should make sure there are sufficient funds in the French bank account to cover both the first monthly payment and the bank’s arrangement fee.
Remember your property is at risk if you do not keep up your mortgage payments!
