Your mortgage is refused and you can’t understand why. Here are a few things about French mortgages you might have overlooked.

When purchasing in France, you have to select a property and make an offer before applying for a mortgage. The mortgage application process can be lengthy and the lender’s decision difficult to accept.

Because French lenders do not have to justify a mortgage refusal, you may repeat the same mistakes with several lenders whereas with a specialized mortgage broker can help you to correct important points.

  • The Debt to Income Ratio (after purchase). The bank will validate your borrowing capacity by determining your level of income against your standing order charges (Rent, mortgages, child support, student loans, car leases, etc.) The ratio cannot exceed 33%.
  • The Remaining Income to live on after mortgage (“Reste à vivre” in French). The lender will check the amount of your remaining income against the number of dependent children.
  • The Personal Contribution. Non-resident financing will require a personal contribution of 20% to 30% minimum of the purchase price in addition to the costs related to the acquisition (Notaire fees, Guarantee fee, Bank application fee, etc.). Note that the Notaire’s fees can reach 6 to 8% of the purchase price for an existing property or 2 to 3% for a new build off plan.
  • The Overdraft.. Overdraft and more broadly, the poor management of your bank accounts can imply the presence of bank fees and penalties which will be prohibitive to obtain a loan. French lenders will render a negative decision even if you negotiated an overdraft authorization with your current bank.
  • The Suspensive Condition for obtaining a mortgage. The condition is a legal clause included in a sales agreement to protect both parties by including the necessity to obtain a mortgage in order to move forward with the title deed signature. If the buyer does not raise financing, it will be mandatory to present the proof of one or even several bank refusals to cancel the sale and be refunded the escrow deposit.
  • The Professional Stability. Professional stability is a key element when applying for a mortgage in France. Do not apply before validating your trial period if you are starting a new position. Provide a copy of your work contract (permanent duration) and a short presentation of the company you work for (Domain of activity, number of employees, established date, etc.). If you carry out a professional activity on your own or on fixed-term contracts, you must demonstrate that your income is stable (or increasing steadily) for at least 3 years. Please note that if you are self-employed, getting a loan can be more complicated if you are borrowing alone.
  • The Mortgage Life Insurance. The borrower’s state of health can be a blocking element despite the existence of the Aeras protocol which aims to provide access to credit for risky profiles. A French lender cannot refused a client because of health issues but the mortgage life insurance added premiums will increase the APR (Annual Percentage Rate) of the financing above the maximum Usury Rate allowed.
  • The duration of the mortgage. It is best to keep the duration as short as possible and allow the APR of your project to remain below the Usury Rate. In general, a French lender will finance the purchase of a rental property or secondary residence over a maximum 15 years duration.
  • The Usury Rate. The usury rate is the maximum global APR rate to which banks must finance individuals in France. All credit-related costs are integrated into the total cost of the mortgage to determine the global APR (called TAEG in French). It must not exceed the Usury Rate which was updated to 4% for mortgages of 20 years and over on March 1st 2023 (3.87% for a duration between 10 and 20 years).

Our dedicated team of brokers can determine your mortgage capacity and review the efficiency of your financing to ensure you are receiving the right mortgage solution for your purchase in France.