Financing a Property Purchase

Make sure you understand the costs involved in buying a house or apartment and how to go about arranging finance…

The three financing options are:

  1. Buy for cash: a straight forward option, but once capital has been invested in a French property it can be difficult to release equity (although not impossible).
  2. Re-mortgage a main house to raise the cash. A straight forward option and one that does not require dealing with French banks. Bear in mind the mortgage warning "Your home may be repossessed if you do not keep up repayments on your mortgage". This option may therefore be putting a main home at risk for the sake of a second property.
  3. Finance the property with a mortgage from a French bank or mortgage provider. There are very strict rules imposed by the Banque de France on all French banks and mortgage providers. These rules govern the amount a person can spend each month on a mortgage.

Mortgage in France

All mortgages in France must be covered by life assurance; many French lenders insist their insurance policies are used and that all the terms of the mortgage are covered.

Note: certain types of properties are not acceptable for mortgage finance.

Should a mortgage application be declined because of financial information, medical underwriting or the unsuitability of the property, the potential lender issues a letter which can be used to ensure a deposit is refunded (if this has been agreed in a let-out clause of the pre-sale contract, the Compromis de vente).

In this instance the letter must be given to the notaire or Agent Immobilier before the date stated in the Compromis de vente. Otherwise the buyer may be obliged to continue with the sale.

On receiving a mortgage offer, there is a 10-day cooling off period. This is a legal requirement and allows a buyer sufficient time to consider the terms of the mortgage before returning the documents to the lender by post.
