It is quite well known that, since 2008, banks in the UK and in France have made life very difficult to self employed looking to get finance to buy properties in the UK or in France. Documents requested are very similar between the two countries, the only difference being the method used to calculate the eligibility for a mortgage.
In recent weeks, due to the increasing number of self-employed applicants for French mortgages, Sextant mortgages has developed an expertise to ease the process of mortgage file building. French banks are also more flexible with self-employed in direct response to the current demand.
French banks will now lend up to 85% LTV to self-employed customers to the condition they can provide proof of their incomes. For them, they request last three years accounts. Accounts can be Tax returns for “real” self employed or Tax return & company accounts for Managing Directors who are also shareholders of their companies. Obviously accounts should be in order and shouldn’t show heavy losses.
Please note that a self-employed will need to provide the same supporting documents as an employed applicant. The only difference being the proof of income which is official tax returns and company accounts done by an accountant.
In order to assess applicants’ financial profiles and to determine one’s eligibility for a French mortgage, French banks will take into account 1/3 of the monthly income from the applicants. This amount includes all sources of income, including salary or profit from self-employment as well as rental income or income from investments. Subsequently, banks will deduct a 1/3 of the total monthly income all the monthly loans and mortgage payments plus the cost of the proposed French mortgage.
The road to obtain a French mortgage is better today. Small business owners need to be supported during these economic conditions. For those for have started their own business in the last few years many are struggling to get finance. That is why our French bank partners have now dedicated underwriting teams for this type of applicants.
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