1. Purchase of a completed property

Property purchase advice- "Compromis de vente" or "promesse synallagmatique" (Bilateral agreement to sell/buy) This constitutes the most common type of preliminary contract for the purchase of existing property with both vendor and purchaser committed, having mutually agreed on the property and the price. Transfer of property will take place subject to signature of a deed before the notary and/or obtaining a loan or mortgage.
Upon signature of this agreement, the purchaser has to deposit a sum which is normally 10% of the purchase price with the notary or the estate agent. This deposit is usually described either as a payment on account or a penalty for breaking the contract and will be deducted from the sale price. The way the system of payment on account and penalty works is as follows: if the purchaser indicates that he does not wish to proceed, he forfeits his deposit; if any conditions included in the agreement have not been fulfilled for reasons beyond the purchaser's control, the deposit will then be refunded; if the seller decides not to proceed, he may have to pay a charge to the buyer. The sales agreement must indicate the method of payment. When using a residentail mortgage to assist with the purchase, the sales agreement should contain a "condition suspensive" (let-out clause), so that if the application is not successful, the deposit will be refunded.
The agreement must describe the property, and should contain other conditions relating to town planning, rights of way, etc.
The purchaser and the vendor must subsequently within a period of time stated in the preliminary contract, enter into a formal deed, drawn up and executed by a notary, to complete the purchase of the property.

2. Purchase of a property to be built

1) Vente en l'Etat Futur d'Achèvement "VEFA" (Sale of property for future completion)This is the most common type of contract for the purchase of a property which is not yet completed. Payments are made by instalments as the construction progresses. The parties must also sign a "contrat de réservation" (reservation contract) which states, among other things, the price of the completed property, the technical specification, the methods and dates of payment, etc. The purchaser must pay a deposit of up to 5% of the estimated price, which is deducted from the purchase price. If the purchaser decides not to proceed with the contract, the deposit will be forfeited. Providing the contract includes a "condition suspensive" if the purchaser cannot proceed because a mortgage application has been unsuccessful, or because provisions of the contract have not been observed, the deposit will be refunded. The parties then sign a deed of sale containing the binding agreement of the parties on the various terms of the preliminary contract before the notary. It is at this stage that the vendor transfers ownership of the property to the purchaser.

2) "Le contrat de construction de maison individuelle" (Contract for the construction of a house) It is possible to buy a plot of land and have a house built on it as in the UK. In this case, it is advisable to make enquiries with the French local authorities about obtaining planning permission and to exercise care in the choice of builder.

You have to enter into a preliminary sales contract for the purchase of the land (see page 8) and a separate contract with the builder. Once you have signed these two contracts, you can proceed with your mortgage application.

Your New French Holiday Home Mortgage

How much can you borrow ?

The monthly payments for all loans and rent should not exceed 33% of your joint or single pre-tax monthly income, this includes the proposed new French Mortgage payments. The calculation is not a straight forward one and even we have been know to get it wrong and we are dealing in French lending market everyday. Contact us for French Mortgage advice

MORTGAGE INFORMATION- French Mortgage Glossary

Currency : Euros or Swiss Francs
Maximum Loan :

French Interest Only Mortgage - 100% of the purchase price. With some of the French lenders the interest only option will need to be supported by a Lump-sum French investment scheme. This will represent a minimum value of 20-30% of the purchase price. The investment can be very secure and starts with a low risk warning.
Repayment Mortgage - 85% of the purchase price or property value (whichever is the lower) for loans over 75,000 Euros or 80% for lower amounts.
Minimum Loan Amount : 75,000 Euros
Security required : First legal charge on the French property
Mortgage type : Repayment and Interest Only options
Mortgage Term : 7-25 years
Arrangement fee : Up to 1% of the total mortgage subject to a minimum of 400 Euros and a maximum of 1% of the mortgage amount.
Location of property : Mainland France, Corsica and French Overseas Deparments/Territories.
Method of payment : Monthly Direct Debit in Euros.
In most instances a valuation appraisal is carried out by the lender. However, it is important to note that this is not the same as a mortgage valuation carried out in UK. The appraisal is undertaken, by a valuer as opposed to a professionally qualified surveyor, and in many instances an inspection of the property is not undertaken. Structural defects may, therefore, not be identified. The purpose of the valuation appraisal is for internal risk assessment only and the results of the appraisal are not released to applicants. All lenders will require you to take out life assurance and buildings & contents insurance for the duration of the loan.

Contact us

FRENCH MORTGAGE OPTIONS :

Capped rate French mortgage

The French capped mortgage works the same as the name suggests. When you secure your mortgage the capped rate will be set for the duration of the loan. you enjoy variable movements up and down as the euribor rate changes, however you have additional protection in that the rate will never rise above a ceiling 'the capped rate'.

Fixed rate French mortgage

The French mortgage rate is fixed for the whole term so you'll know exactly how much you will have to pay in French Euros and how many payments you'll have to make. If you take out a fixed rate French mortgage, the option to convert it to a variable rate French mortgage at a later date is not available. There is an early redemption charge payable on our fixed rate French mortgages.

Variable rate French mortgage

As in the UK, our variable French mortgage rates are linked to the variations in the central bank lending rate. However, unlike the UK, the monthly payment on your loan usually remains stable when rates change, with the French mortgage term varying according to the rate movement. most French mortgage rates are reviewed quarterly, after the end of the first year following mortgage completion and complete release of funds. There is no redemption charge for early repayment with most standard variable rate mortgages and of course you can convert to a French fixed rate mortgage at any time.

Please Contact us for a personalised quotation tailored to meet your individual requirements.

Non National Life assurance

We Would normally arrange this for and a quotation can be provided upon request. We include application forms with your French mortgage request and you should return them to your Overseas mortgage advisor which in turn processes the application. They will then pass your details on to the insurer so that the insurer can arrange your policy. If a medical examination is required in connection with your Non National life assurance application, you can visit a doctor in your country.

French Buildings & Contents insurance

We are able to arrange the house Building & Contents insurance with either a French insurance company or a UK company backed home insurance plan. Link

Once you have signed the Pre-Sale documentation, you will be legally bound to complete the purchase of yourFrench property. At the same time you will be required to hand over between 5-10% holding deposit. This money is at risk if you fail to complete or pull out of the sale at any time from this point. (even if you can not raise the finance through a French Mortgage lender). It is important to seek French Mortgage advice before you commit to buying a property in France.

Remember: Mortgage advice is a specailised subject, always ask your advisor if he is qualified to give such advice. We recommend that you only talk to and put your trust in a professional, 'after all, you wouldn't ask your local car mechanic to solve a toothache...
or would you?

UK Mortgage Qualifications:

CeMap - Certificate In Mortgage Advice and Practice
MAQ - Mortgage Advice Qualification