Opening a savings account and increasing your personal contribution will help you contract a better mortgage in 2023. But that’s not all …

Applying for a mortgage in France has become an arduous endeavor since last summer. With a continuous rates increase (Mortgage interest rates are at their highest since 2016 but remain below 3.25% fixed over 20 years) and a lingering issue with the usury rates for non-resident clients, borrowers must strengthen their files with an additional personal contribution and precautionary savings.

  • Personal contribution

French lenders are faced with an increase in the cost of money in a context marked by a drastic drop in purchasing power given the surge in inflation. Boosting your personal contribution has the virtue to reduce the amount to finance. Therefore, it will minimizing the risks taken by the lender and also reduces the repayment duration (which will lower the borrowing rate).

  • Precautionary savings

Opening a savings account with an initial deposit equivalent to 6 to 12 monthly payments will help you to reassure the lender that you will be able to intervene in the event of hardship. No need to dedicate all your savings to the constitution of the personal contribution, keep a residual savings to open an account with the lender.

  • Mortgage life insurance

Controlling the cost of your mortgage life insurance is one of the few levers available to reduce the cost of your financing and stay under the usury rate applied. Most French banks will require a life insurance policy linked to your mortgage. It is split between borrowers in proportion to revenue earned. A group negotiated life insurance policy is often the least expensive option but you should also get your own estimate (Your mortgage broker can help).

  • Bank arrangement fee

French banks and mortgage providers will charge you an arrangement fee. The amount of the fee will influence the bank’s margin on the financing. It is payable after you are approved with an accepted mortgage contract and only when you signed your title deed with the mortgage funds released (partially or totally). It is advisable to check in advance. The fee varies from different lenders and some do not have a limit at all  (one percent of the amount of the mortgage with no limit vs 1 % with a 1 000 EUR limit per example).

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