Mortgage in France for non-residents
Let’s focus on the last step before the signature of the deed of sale: the search for a mortgage in France. Once the preliminary contract is signed by both parties, you have a period of about 60 days to find the necessary mortgage to complete the transaction. During this period, the Notaire will gather all the necessary elements required to legalise and formalise the transaction. Meanwhile, the seller will use this period to prepare for his departure from the property, should you obtain this mortgage. If you are successful, you will then seal the acquisition of your new property in France at the Notaire. You have two choices to finance your property purchase. First, you can choose to obtain a mortgage from a financial institution operating in your country of origin. Second, you can decide to approach a French bank. We do not have the necessary knowledge and are not familiar with the legislation in force in your country. Therefore, we will not be able to advise you on mortgages in your country of origin. In this article, we detail the steps you need to follow if you choose to get a mortgage in France. As a non-resident, you need to undertake a 7-step process to reach the release of the funds.
7-step process to obtain a property mortgage in France
You are going to have to follow a step-by-step process. The steps of the mortgage process are interdependent. Therefore, you must take these steps in the right order. As a foreign buyer, you are going to follow the same process as the French themselves. You will simply need to provide additional supporting documents. Some French banks may be a little more reluctant to provide a mortgage to foreigners. Nevertheless, nothing is insurmountable particularly if you are European.
Step 1, mortgage research in France
The key word is “compare”! Indeed, there is nothing like competition between banks to bring the cost of a mortgage down. By canvassing several French banking institutions and comparing them, you will get the best funding conditions. Our broker partner in France can perform this assignment for you. To go through a broker is beneficial. Indeed, the bank that will provide you the mortgage will mostly pay him. The broker can get a rate between 0.1% to 0.3% lower than the rate you could obtain on your own. When a broker works with several banks and has many clients, he can negotiate rates that you cannot obtain yourself. Therefore, it is better to begin by contacting a broker rather than canvassing the banks by yourself. Indeed, if several institutions refuse to fund your project, it will then be more difficult for the broker to re-present your application. We generally advise to seek the services of a broker as this is a win-win option. Indeed, you get a lower rate. Also, a broker provides you a complete overview of the available offers on the market. You then just have to compare them. We translate all the French offers that the broker has collected into your native language. You will then be able to fully understand the conditions attached to each of them. Once you have chosen your mortgage, we can start putting together your funding application.
Step 2, documents required to put the mortgage together
Once you have chosen the most interesting funding offer, you will need to put together your application. You can split the documents required for this mortgage application as a foreign buyer into four groups. The first group relates to proof of identity and address. – you must include a copy of your ID card or your passport for both applicants if applying for a joint mortgage. – a civil partnership certificate, divorce certificate or a marriage certificate is also necessary. The bank can also ask you to provide a family record book. – a proof of address such as a gas or an electricity bill. The second group concerns proof of income. – you will need to provide your last six payslips, a contract or certificate of employment and your most recent income tax statement. The third group of documents required includes your current banking arrangements. – your last three months of bank statements. Both applicants for a joint application must present these statements and the details of the account you want to use for the repayments. Repayment tables for existing borrowings and proof of savings are also necessary. You need to mention in your application if you already own a property. This is the fourth group. You must present – deed for the property or a certified list of assets. Also, you need to present the last local tax statement, and details of leases for existing investments. As a foreigner, you will need to present all these documents to apply for a mortgage in France. Do not hesitate to start gathering them as soon as you have defined your budget. This will save time once you start putting your file together. Once your application is complete and sent to the bank, you must wait until their agreement in principle. This usually takes between 7 and 10 days after the receipt of your application file.
Step 3, the French bank’s agreement in principle
When the bank has received all the documents, it will conduct studies and financial analyses. Once these tasks completed, the bank will give you its agreement in principle. So, what is an agreement in principle? The agreement in principle of a mortgage has no legal value, and does not represents a formal commitment on the part of a bank. Therefore, this agreement is not a contract. This agreement is essential to continue your project to purchase a French property. You have probably gathered that there are two possibilities. You either get refused or accepted. The bank refuses to fund your purchase. Do not give up yet! We will simply continue to approach financial institutions in France. In collaboration with one or more brokers, we ensure that you get the funding that will allow you to complete your purchase in France. The bank accepts to grant you the mortgage. Great news, you now have obtained your mortgage with potentially the best possible conditions as it was your first choice. In this case, you can proceed straight to the next stage, the official mortgage offer. It may be advantageous to look for multiple agreements in principle from various banks in France to multiply your chances of obtaining the lowest rates. Keep in mind also that a bank can withdraw its agreement in principle without having to justify its decision. This could happen for example if your situation is unclear or if you lose your job during the purchase process. A simple agreement in principle does not constitute a firm and final proposal. The bank cannot withdraw only when the Notaire has received the formal mortgage offer.
Step 4, the formal mortgage offer
The time between the agreement in principle and the property mortgage offer can vary from a few weeks to several months. Actually, it mainly depends on the complexity of your file. Legally, the bank has no time limit. Therefore, they sometimes spend some time taking stock of your situation. For a standard file, the delay is generally four to six weeks. The official offer summarises in writing the terms and conditions of the mortgage. It will be sent to you by registered mail with acknowledgement of receipt. Once you receive this offer, we translate into your native language to avoid any misunderstanding. This written offer is mandatory and is the subject of strict regulations. This document must include a number of key information. – the full details of the bank in France and your identity – the nature, purpose and terms of the mortgage: date and conditions for the provision of funds, schedule of depreciation – the funding amount: total cost, rates and if applicable, the indexing modalities – the required guarantees (particularly insurances) and their cost, including an offer to you to potentially choose another equivalent insurance to the one offered by the financial establishment with the insurer of your choice – the terms of transfer of the mortgage to another person – the amount of the administration fees due to the bank should the contract not be concluded – the terms of early repayment – the mention of the cooling off and the acceptance period Once you receive your mortgage offer, you are entitled to a legal cooling off period.
Step 5, cooling off period
The funding offer is generally valid for 30 days from the date of its receipt. The bank therefore undertakes to maintain its conditions during this period. Any modification to the conditions of the mortgage would lead to the creation of a new offer. It can include the amount or the rate of the credit. This obligation does not apply to variable rate mortgages. As a borrower, you benefit from a legal cooling off period. Therefore, you will not be able to accept the offer any earlier than 10 days after its receipt. Any acceptance of the offer before the expiry of this delay makes the mortgage proposal null and void. If you choose to accept the offer, you then reach the 6th stage of this process. You may have gathered that this step is crucial. It is indeed your last chance to withdraw from the process.
Step 6, acceptance of the mortgage offer
Until you accept the offer, no one can ask you for any money. Likewise, the bank cannot give you any money during this period. Once you accept the mortgage offer, the bank can no longer modify the proposed conditions. Nevertheless, only the completion of the following two conditions can make the contract final. You and the seller must conclude the sale in the four months following the acceptance of the offer. This means that the seller and you must schedule an appointment for the signing of the deed of sale at the Notaire within this time frame. Otherwise, a cancellation of the contract is unavoidable. However, you would retrieve any sums paid (including administrative fees). An insurer must accept to cover you. If insurers refuse to cover you, you can request the cancellation of the mortgage contract without being liable for any costs. To accept the offer, you simply need to return a signed copy by mail to the financial institution in question.
Step 7, the signature of the deed of sale in France
Once the mortgage offer accepted, the preliminary contract that you have put in place with the seller during the previous step becomes fully valid. Therefore, neither of the parties can any longer withdraw. The transaction becomes official upon signing the deed of sale. This deed will definitely mark the transfer of ownership between the seller and you. An account belonging to the Notaire receives the funds from the bank a few days before the final signing. A month after the signature of this document, your first monthly payment will be due.