French mortgage rates and tips

Mortgage lending across the board through UK lenders has dried up over the past 12-24 months. This has inevitably had an impact on the ease with which British buyers can secure finance through UK banks to purchase holiday homes in France. The days when homeowners released equity from their properties to pay for that dream property in Provence are a distant memory.

Rather than using cash or remortgaging their properties in the UK to buy holiday homes in France, the French mortgage is growing in popularity. A combination of falling house prices in the UK eroding the equity that homeowners have in their properties and the UK mortgage market drying up leaving homeowners with very few remortgage options, has seen an increasing number of British buyers turning to a French mortgage as a means of financing a property purchase in France.

Also, with the Pound currently weak against the Euro, buyers can take currency fluctuations out of the equation, and potentially save thousands of pounds on the purchase, by taking out a French mortgage and holding onto the property until Sterling rallies.

For those buyers who have 15-20% deposits, French mortgages are proving particularly popular with UK buyers who can still take advantage of some of the lowest mortgage rates in French history. Although historically French lenders have had much more stringent lending criteria than the UK banks, for those borrowers who can meet these criteria, there are some exceptionally attractive fixed and variable rates on the market. It is even possible to secure 100% mortgages if the borrower has savings that amount to 30% or more of the amount they want to borrow.

It's worth noting that borrowers will have to prove they can afford the repayments on the mortgage. French mortgages work on the basis that the total of all mortgages and loans held by the borrower do not exceed one-third of their income, which means that monthly repayments on a UK mortgage will be taken into consideration when trying to fund a property purchase in France.

4 Top tips

1. Identify the area you would like to find a property in.
2. Review your financial situation with a professional French mortgage broker to find out how much you can borrow and the costs.
3. Send your broker your financial documentation and obtain a decision in principle, to be used when negotiating price with agents.
4. Finalise mortgage choice and selected a protected payment, long term capped or a fixed rate for the term.

Read More

French mortgage currency update

Just as it was gearing up for roast swan and chestnut stuffing the pound suffered a setback in December. There was no single point of failure. It was the result of a combination of factors, some serious, some less so. The UK economy bore some of the blame. Some 33,000 public sector employees were laid off in a single month and none of them found new jobs in privately-owned firms. It was not what the chancellor had promised: he had promised the private sector would take up the slack. In November the public sector net borrowing requirement - the gap between tax revenues and public spending - hit a record £22.8 billion, not a clear sign that the government would be able to close the budget gap within five years. Economic growth in the third quarter of the year was downgraded from 0.8% to 0.7% at its second revision. It was not a big deal in itself but was seen as symptomatic of an intrinsically soft UK economy.

The euro has its own problems, not least the threatened downgrades of the credit ratings for government debt in Greece, Ireland, Spain and Belgium. A summit meeting of EU leaders in mid-December delivered an agreement that there should be a long-term plan to preserve financial stability but the details were sparse. Until investors see the details they will remain unconvinced. As long as they dislike the euro they will lean towards the dollar but it is difficult to tell whether they are buying it because they like it or selling the euro because they dislike it. From sterling's point of view, the euro's performance is important because Britain's economy is so closely involved with Ireland and the continent. If the euro goes down against the dollar the pound will surely follow.

The Christmas fortnight is always a dull period for financial markets. This one shows no sign of being any different. Exchange rates moved but the significance of any movements is likely to be minimal. The four cents that sterling has lost in the last month may well be important; its price action in the last ten days was always unlikely to be significant. For more news for mortgages in France please visit our website.

Read More

Life assurance for French mortgages set to change

The French mortgage market has received many plaudits recently as it is in relatively good shape compared to its ailing Anglo Saxon cousin. Once you look on the inside of the institutions and procedures of many of the banks you might be forgiven for thinking that you had been transported back to the mid 1980s. In recent times, competition has increased for mortgages in France for international buyers and in the past couple of years the first mass market interest only loans were introduced. Now further reform is on the cards as the French economic and finance minister, Christine Lagarde, continues her improvements to the regulatory landscape especially hidden bank charges.

Many international buyers of French property are surprised to find that life assurance is compulsory for all French mortgages. Even more surprising, is that the majority of French banks only allow applicants to use the life assurance recommended by the bank. However, this seems set to change with the Lagarde Reform which is currently going through the French legislative process. The main provision of this project lies in Article 17 which amends Article L. 312-9 of the Consumer Code as follows: "A lender may not refuse to secure another loan insurance contract when the contract has a level of security equivalent to the insurance contract that offers". Other amendments are also being proposed to strengthen consumer rights in this regard and the changes are expected to come into force on the 12th May 2010. This shake up should bring in more competition which is long overdue within the market.

The benefits of this reform will produce real cost savings over the life of the mortgage, with some insurance brokers saying that insurances costs pay go down by over 50 per cent. The minimum typical type of life assurance required for a mortgage in France is against death or total loss of mobility which generally costs €30 per month per €100,000 borrowed which for an average sized loan over 15 years would save over €5000. For more information or to sign up to our newsletter please visit www.athenamortgages.com

Read More

FRENCH PROPERTY AND MORTGAGE SUMMARY OCTOBER 2009

French property prices rise by 0.1% during September
Prices now 2.8% higher than six months ago
Number of French mortgage enquiries through Athena up 21% during Q3
French mortgage completions at Athena Mortgages up 14% Q3 on Q2

London, 19 October 2009 – Similar to the UK, the French residential property market is continuing to show signs of stabilisation. While prices* fell by 1% during Q3, they rose by 0.1% during September, resulting in a total positive return for the period April to October 2009 of 2.8%. Returns for the year to date have now pulled back to a respectable -7.8%.

Unlike the UK, however, a history of prudent lending in France (lenders do not allow borrowers’ total outgoings on finance payments to exceed one third of their total gross monthly income) has meant mortgage finance is still readily available.

While mortgage finance in the UK remains extremely difficult to secure, especially at higher LTVs, the French banks continue to lend to borrowers with smaller deposits, even up to 100% LTV. This level of LTV is also available to non-resident borrowers, both for second homes and investment properties.

The 100% mortgage, unthinkable in the UK, is proving highly attractive to investors given the ongoing weakness of Stirling.

Interest in the French property market among UK-based investors is soaring as a result. In Q3 2009, Athena Mortgages saw a 20% rise in mortgage enquiries on Q2, which in turn was up 42% on Q1. Mortgage completions in the third quarter were also up 14% on Q2. Many British property investors are now looking across the channel to add to their portfolios given the difficulty securing (competitive) finance at home.


The buy-to-let sector in France is attracting particular interest from investors at present, as depressed prices are boosting gross yields significantly in many areas. In the Normandy town of Alençon, for example, gross yields are 7.5%, while in the medieval town of Poitiers, western France, they are currently 7%. Nevers in central France boasts the highest gross yields, currently, of 7.6%. Other towns of note include Clermont Ferrand (6.8%) and Tours (6.4%).

A growing number of UK investors are also placing French leaseback properties into SIPPs, something that can be arranged through several French lenders. To this end, Athena Mortgages is currently working closely with French tax specialists, Sykes Anderson, and Liberty SIPP.

For second home buyers, now is an ideal time to buy into some of the most desirable towns and cities of France at significantly discounted prices. For example, prices in the highly sought-after destinations of Biarritz, Cannes, Perpignan and Nice are all approximately 10% lower than a year ago.

There is a degree of correlation between the UK and France, at present, in the sense that both property markets are clearly stabilising. However, while the UK property market remains very difficult for investors to access given ongoing lending constraints, there is now a real appetite to lend among the French lenders, who have suffered much less than their British counterparts. For a growing number of British property investors, France is fast proving the place to be, particularly given the availability of 100% mortgages, which circumvents the punitive exchange rate.

Crucially, there is also significant innovation at the product level. For example, we have recently launched a ‘next generation’ hybrid mortgage product in conjunction with a major French bank. With a typical rate of 3%, the new product enables borrowers to split their mortgage amount into an interest-only portion and a repayment portion, which represents a perfect balance between the potential shortfall of a capital repayment loan and the speculation of the interest-only route.

With extremely competitive borrowing rates, attractive prices and genuine product innovation, there’s a real buzz to the French mortgage market at present.

For the best second-home, leaseback, buy-to-let and equity release mortgage products, visit the Best Mortgages section of the Athena Mortgages website.

Read More

Guide to getting a French mortgage or How much can I borrow in France?

French mortgages are somewhat different from loans/bonds/mortgages in other countries. For a start, in 95% of cases the amount you will be able to borrow from a French bank will be based on an affordability calculation that will be linked to your provable income, whereas in the UK and US it is possible to have "self cert" mortgages where no proof of income is required. In the Anglo Saxon world, with a certain amount of deposit, the future rental income from a buy to let rental property will be sufficient to obtain mortgage finance without reference to income documentation from employment or accounts. That is not to say that French banks do not consider the future rental income from buy to let or investment property, indeed, some banks will take up to 100% of the future rental income from the property into account when considering the affordability of the French mortgage loan to you.

Lets look at an example, French banks are willing to let you spend a very sustainable 33% of your gross income on servicing all your borrowings. For somebody earning the equivalent of €60,000 per year, this would mean €19,800 per year or €1650 per month. If for example, you have a mortgage of €1,000 per month, this would leave you with €650 per month to spend on a French mortgage. A quick glance at a mortgage calculator will show you that for €650 per month you could have a mortgage of approximately €100k to €200k depending on interest rates, the duration you would like to have the mortgage over and whether the mortgage is on interest only or not. If the property you were looking at had a rental income potential of 4% of its value on an annual lease basis you could realistically obtain a French mortgage of over €400,000, providing the property was valued at that amount.

There is some flexibility in the system and brokers with their personal contacts at banks can sometimes make the correct representations in order to obtain better rates and higher loan amounts. For a free quote to find out how much you could borrow in France, just give us a call on +44 207 471 4515 or visit our website. If you like to see a list of the required documentation for obtaining a french mortgage please click here. An experienced French Mortgage broker such as Athena Mortgages can save you time and money by helping you to select the right French mortgage for your project to suit your circumstances.

Read More

Live longer and be happier with a mortgage in France

It's official, the France is now sitting pretty at the top of the league for the European quality of life index according to a study from U switch published yesterday. The report paints an idyllic picture for those citizens from the UK who can move to France where they will enjoy lower costs for life's essentials such as food and fuel, early retirement, more holiday, more sunshine, better heath care and a longer life by 2 years. Access to the more relaxed lifestyle available in France is accessible to the Brits who have the highest average salaries in Europe and many more are now enquiring about properties and mortgages in France according leading French brokers.

In August and September enquiries for mortgages in France at Athena Mortgages were up, with many enquiries for 100% mortgages. Mortgages in France are available at rates from 2.35% on a variable basis, long term fixed rates starting at 4%. The availability of credit at these rates and at this level of loan-to-value is encouraging buyers who otherwise might be put off by the strength of the euro versus most other currencies. Competition amongst French banks is also increasing, driving down bank margins. Innovation has made a come back to the market place signalled by the recent launch of a next generation hybrid mortgage which allows borrowers to split their loan amount into a portion on interest only and a portion on repayment, subject to a minimum loan of €300k.

Whilst we can't all move lock, stock and barrel across to France to endlessly enjoy the delights of good climate, shorter working hours, better doctors, cheaper petrol and more holiday, we can can perhaps purchase a property in France to sample the lifestyle when we can.

To apply for a mortgage in France, that may increase your chances of living longer and being on the whole happier, you will need to be employed or have 2 years accounts if you are self employed. To find out how much you can borrow in France just give us a call on +44 207 471 4515 and we will let you know what size mortgage you could obtain.

Read More