Friday, October 07, 2011

Top Three Differences between Mortgages in France and the UK

by Sharon Hill, French Mortgage Direct

Most people buying a French property need to raise some type of mortgage finance to help them make their dream come true. Often, the Estate Agent selling the property will offer assistance, putting the buyer in contact with a local bank. The local bank will rarely be in a position to offer advice and guidance and the purchaser could end up with a mortgage but no knowledge of the French mortgage market.

Lack of understanding can be catastrophic for buyers especially if they assume that French mortgages operate in the same way as in their home country. Without professional help, buyers could end up having their mortgage application refused by the lender resulting in not being able to proceed with the purchase, or with a mortgage unsuitable for their needs.

When choosing which French mortgage is the most suitable for you, it’s important to understand how property finance works in France.

Here are the top three differences you should be aware of:

1. No Non-Status Loans

Self-Employed applicants often ask if they can apply for a non-status loan. This means that they would like to obtain finance for their property purchase without providing any proof of actual income or outgoings but this is not possible in France. French lenders are legally required to ensure all loans and mortgages are “affordable” for the borrower and therefore non-status loans are not available.

If you can’t prove your income, you should consider alternative means of as a French mortgage won’t be possible for you.

2. It costs money to register the mortgage

In almost every country, mortgage lenders charge borrowers to take out a mortgage in the way of arrangement fees. However, in France, there is an additional cost to arranging a mortgage which is the cost of the guarantee. Each mortgage in France is registered and a guarantee is taken out by the bank to protect their funds.

A few different types of guarantee exist but non-resident borrowers are...

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