The recent rate increases and tightening of banking criteria were always going to come after French interest rates reached historic lows last September and we also had maximum LTVs. However, all is not lost as French mortgage finance is still available at 80% LTV for Second homes and Leasebacks at rates far more competitive than those available in the UK.
At 80% LTV you have 3.70% capped at 4.70% for the entire 20-year term or alternatively you can fix at 4.35% for 25 years. In spite of the recent rate rise on the 7th July by the ECB, the long term index called the TEC 10 is down 0.25% from its 2011 peak, indicating a softening of the view on long-term interest rates. When you compare these French loans with the comparable UK 5-year fixed rates they are very competitive indeed. The peace of mind and security offered by these sorts of mortgage products really is an area where the UK has something to learn.
My top 5 tips for dealing with a dynamic rate and bank attitude environment such as this is to:
· Begin investigating mortgage options as early as possible in the buying process and get a decision in principle from an independent broker.
· Ensure you qualify for life assurance and find out if you will require a medical exam.
· Ensure all paperwork for the loan application is as complete as possible prior to signing a Compromise de Vente (purchase agreement)
· Once you are ready to purchase, send the completed file to an independent broker who is aware of the criteria and can place the application quickly with the right bank to match your profile.
· Sign and return all documents as quickly as possible to keep the momentum going as the longer the file is in process, the more likely criteria can change or rates increase.
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