Generally, French lenders will lend up to 80% of the purchase price to non-residents, although each lender has different criteria.. Some lenders will also add in the mortgage amount the notary fees (notary fees in France can range between approximately 2.5 and 8% depending on whether or not the property is a new build and therefore benefits from reduced fees).
Due to French consumer law, lenders have to assess how affordable it is for a borrower to take on a French mortgage. They will take into account any existing loans, mortgages, outstanding credit card balances which are not paid off in full at the end of each month, child maintenance, rents etc that you may have as fixed outgoings.
Then they compare this total with your main income and others incomes you may have.
It is important to notice that spending such as for food expenditures, electricity bills etc are not taken into consideration in their calculation. However it is important to have an idea about the total spending to have an idea of how well you manage your accounts (they prefer customers who are able to save money every month).
In France, ideally your debt/income ratio should be below 33%. A debt/income ratio of 30% is excellent. A ratio between 30 and 36% is good. But a ratio of more than 40% is often problematic to obtain a mortgage. In other terms, the household must have at least two-thirds of its incomes available after paying all mortgages and loans (on a monthly basis).
Each lender will assess an application in a different manner depending on in-house policies, it is therefore difficult to predict with 100% accuracy the outcome of any mortgage application, although our lengthy experience in this domain does help in assessing potential borrowers and advising which lenders would be susceptible to accept your mortgage application. Currently, at Sextant Mortgages, we have a success rate of 95% of all applications sent to the French banks.
Mr and Mrs Smith, both 47 years old, would like to purchase a €200,000 French property.
They need an 80% mortgage over 20 years and have €60,000 available to cover the deposit and buying costs.
Mr Smith earns £43,000/year and Mrs Smith earns £30,000/year.
They own outright their main residence in London which is valued at £350,000 .
10 years ago, they also bought a buy to let property. The monthly repayments mortgage on it is £550 and they perceive a rental income of £700 per month.
Additionally, the couple pays £150 each month for a car loan repayment.
They selected a mortgage with a term of 20 years and a fixed rate of 4%
The bank will take into account 75% of their rental income and the Net salaries of the couple.
The debt ratio is:
As you can conclude from the calculation outcome, the debt ratio of Mr and Mrs Smith is excellent. The verdict is positive; they will receive a formal mortgage offer that will enable them to buy their second home in France without difficulties.
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