Buying Guide

With many years of experience Somerset Mortgages provides an independent and comprehensive service to help you buy or remortgage your property in France. We work with all the French banks, the UK banks that operate in France and a number of European investment banks. Working with so many banks allows us to offer you the best deal, whatever your circumstances.

We have a close working relationship with the banks in France and due to the volume of business that we introduce, we are regularly able to offer lower interest rates and fees than you would normally be offered.

What are the steps involved in getting a French Mortgage?

(In France, after you have signed a purchase agreement, you only have 30 days to be able to get your deposit returned, if you are unable to qualify for a mortgage. Somerset Mortgages always recommends that you obtain an agreement in principle before signing any contracts. This will also speed up the process of arranging the mortgage when you do decide to buy.)

1. Find out how much you are eligible to borrow by completing our online quotation request form.

2. Instruct Somerset Mortgages to obtain an Agreement in Principle on your behalf.

3. Go to France and find a suitable property.

4. While in France, sign a sales agreement (Compromis de Vente) & transfer the deposit via Somerset FX to secure the property.

5. Send us a copy of the signed sales agreement, which we will submit to the lender.

6. Lender instructs valuation, if required.

7. Acceptance of life assurance by lender.

8. Lender issues a mortgage offer.

9. Somerset Mortgages will open a French bank account and arrange buildings insurance.

10. Transfer balance to the Notaire via Somerset FX.

11. Arrange monthly mortgage payments with Somerset FX Regular Payment Plan.

12. Completion.

What type of property can I get a mortgage on?

We can arrange mortgages for individuals or companies to buy main homes; second homes; rental or investment properties; leaseback properties; off-plan properties and commercial properties. Equity release mortgages are available. Bridging finance is also available

What currency will my mortgage be in?

All French banks will provide mortgages in Euros, but we can also arrange mortgages in other currencies such as US Dollars, Sterling, Yen and Swiss Francs.

What is the maximum loan amount (LTV%)?

Depending on the valuation of the property, or purchase price, non-residents can borrow up to 85%. All mortgages are subject to income but some banks will also take rental income into consideration.

Lending Criteria

Lenders calculate financial commitments (loans and rent) including the requested mortgage, as a percentage of stable pre-tax income. As a general rule the ratio should not exceed one third, but obviously this depends on the figures involved as the higher the income the higher the debt ratio can be. In fact, most lenders try to apply their rules with common sense and look at the actual amount of disposable income, not just the percentage.

What is the minimum loan amount?

The minimum loan amount that Somerset Mortgages will consider is €100,000. There is no maximum.

How long is the term of the mortgage?

The mortgage term can be from 5 - 30 years.

Do I need life assurance?

Life assurance is mandatory with most of the banks, but not all. Somerset Mortgages can help you arrange life assurance at minimal cost.

Which mortgage types are available?

Both capital repayment and interest only mortgages are available for both purchase and equity release.

Interest rates

The interest rate will depend on the currency of the mortgage. For example, if a Euro mortgage was selected then the EURIBOR (European Interest Offered Rate) would apply, plus the bank's margin. Buyers should be aware that many advertised rates for French banks are only applicable for the first 3-12 months of the mortgage.

Buildings insurance

This must be in place before completion. Somerset Mortgages can provide you with a quote.

Bank account

You will be required to open a French bank account before completion. Somerset Mortgages can assist you with this at no additional cost, if required.

What timeframe is involved in securing the mortgage?

An Agreement in Principle can be obtained from a lender once all the requested documentation has been submitted. This takes approximately three working days. However, for loan amounts in excess of €750,000 this may take longer.

The mortgage offer cannot be returned to the lender until a 'cooling off' period of eleven days has elapsed. A minimum of six weeks should be allowed from application to completion.

Organising payment of your French mortgage

Please be aware that missing a monthly mortgage payment may have serious consequences and we therefore strongly advise participation in the Somerset FX Regular Payment Plan. This service gives you peace of mind in the knowledge that your French mortgage repayments will be met automatically each month.

Completion

Mortgage funds will be released by the lender to your Notaire for completion of the purchase.

Fees and Taxes

• Somerset Mortgages charges a non refundable administration fee of £150 to prepare, package, facilitate and courier your mortgage application.
• Somerset FX does not charge a fee or commission.
• The Notaire will provide you with a breakdown of fees payable once a sales agreement has been signed. The Notaires fee will include Stamp or Transfer Duty and the Mortgage Registration Fee.
• The Bank's Arrangement Fee will generally be 1%. Where possible we will negotiate on your behalf to reduce this.
• The estate agent commission will vary from 4% - 12%. Details should be available in the agents Mandate (Authority to sell) from the seller.
• Mortgage Registration Fee varies from 1% - 2% to register the lenders charge against the property.
• Stamp or Transfer Duty - 4.8% on properties over five years old
• VAT - tax sur la valeur ajoutee (TVA) on new properties is 19.6%. This can be reclaimed, see section on Leaseback Properties.