Getting a French property mortgage requires more than just choosing from the list of French Mortgage Products: you also need to consider the French property mortgage potential of your proposed property.
French Property Mortgage | 4 Considerations
Assessing French property mortgage potential requires the dispassionate assessment of the 4 things you should look for before applying for a French property mortgage:
- Price: The price should in line with actual market prices of properties recently sold in the locality
- Condition: The structure and condition of the property must represent good loan collateral
- Location: The property’s location needs to be in an economically viable area
- Demography: A bank will expect that the demographic profile of the location makes resale on a hypothetical default a viable prospect
Visiting the Property
Much of the success in obtaining a French property mortgage comes from being well prepared when you view the property so you can ask the right questions of the vendor.
Just as at home, it’s worth taking a camera, torch, tape measure, small compass, and notebook & pencil on a property viewing trip.
It can be helpful to complete a checklist (for comparison purposes afterwards) of all the properties you view as it is not usual for French estate agents to produce detailed particulars.
Establish whether the property has electricity connected, gas (bottled or town), phone, broadband (ADSL), TV, fosse septique or mains drainage.
French utilities charge by the metre for a new connection to their services. The charge is calculated from their current nearest point to your property. In some rural areas, for example old lavender farms in Provence, the cost of connecting lacking services can be many times the purchase cost of the property.
Whilst viewing the property, you should note the condition of the walls, windows, roof, chimney and drains. Ask the agent or seller why the property is for sale and how long the property has been on the market (2-3 years is quite common in France outside the big towns).
Try to find out what the neighbourhood is like and consider whether you would fit in. If you see a property you like, go back later (different time of day/week), unaccompanied, to check out the district, visit the bar, talk to the locals. In holiday areas, it is important to establish how many businesses close at the end of the season, as this practice is very common in France. Ask whether the area would be swamped with visitors during the holiday season. Consider how long the round trip to the boulangerie is and whether you could get home from the restaurant without driving.
If the property has its own garden or grounds, you should take note of the state of boundary walls, gates, fences, patio, pool area and outdoor structures such as sheds, pool house, lawn, flower beds, irrigation, shrubs, trees, shade and outdoor lighting. These can be difficult or expensive to change. It’s important to establish who is responsible for the boundary fences and whether there are any rights of way. In apartment blocks you should consider the common parts, which can only be updated when the whole copropriété votes for the work.
Other factors in the near vicinity which might affect your enjoyment, and the willingness for a bank to grant a French property mortgage, include: safety (crime rate, roads, lighting), noises (trains, planes, highways, animals, industry), smells (farm animals, neighbours, industry, septic tank, water treatment works), neighbours (demography, children, pets, hobbies, privacy), public transportation (bus, train, metro), shopping facilities and hazards (flooding, avalanche, power lines, phone masts, wind generators).
Make sure you find out the French postcode “code postale“; it’s incredibly useful for subsequent internet research, especially for checking comparative property prices.
Once in your chosen part of France, it is usually possible to buy 1:25000 scale IGN Série Bleue maps of the area showing contours, water courses, power lines etc. You can also use the satellite view of Google Maps to get a very clear recent picture of the French property and its neighbourhood.
Now might also be a good time to remind yourself of the points in our Consumer Guide.
There are number of factors that you should take into account in order to check that the asking price for a French property is fair and reasonable.
The first factor is the location and condition of the property itself. A useful cross-reference is This Price Per SqM Guide, covering every postcode in France, to the actual price per square metre that has been achieved by other properties in recent sales.
The asking price of a French property price may differ depending on where you see the property advertised. Don’t assume that it will be advertised at a single price. It may have been on the market over some years at a steadily falling price. It is also quite possible that the property may be simultaneously offered for sale via a combination of sales channels.
Agents immobiliers are usually local to an area and therefore will only have properties for sale within that area.
The agent will add commission of around 6% to 10% to the price of the property and will probably have a shrewd idea of the lowest price a vendor will accept. It is quite common for the asking price to be deliberately set 10%-20% above what the agent believes to be realistic.
The window price of a property is usually shown as FAI (Frais Agence Inclus). Sometimes agents appear reluctant to phone a client in front of you, because the offer price to the vendor (prix Net Vendeur) will be exclusive of their fees. Most estate agents are members of FNAIM, the Fédération Nationale des Agents Immobiliers, or ORPI.
Notaires sell property, but it is not their main activity and the clerc who deals with property sales may not be available full-time.
To all practical intents and purposes you can consider the purchase of a French property through a Notaire as being equivalent to the purchase of a French property through an Estate Agent except that the Notaires estate agency fees are normally slightly lower than for a French estate agent.
Particulier à Particulier
Particulier à Particulier or private sales represent quite a large percentage of French property market transactions and have the advantage that there is no estate agent commission to pay.
In France there are two types of auction, voluntary auction and judicial auction.
Voluntary auctions are public auctions held through the auspices of a notaire where the auction method of sale is being used because either the property is hard to value or because the vendor needs a quick and definite sale.
Vendors selling at a voluntary auction may be either private owners, executors of an estate, or public bodies who wish to dispose of surplus property. The latter are called ventes des domaines.
Voluntary auctions may also arise as a result of the French inheritance laws, when family members decide to sell in a completely transparent manner through an auction in order to avoid disputes or when there is a family disagreement as to the worth of the property.
Judicial Auctions or Adjudications Judiciaires
They occur as a result of a saisie immobilière, a petition to a Tribunal de Commerce or sometimes arising from a contested inheritance.
A French property mortgage is not available for a property that is uninhabitable unless the mortgage application includes the work needed to bring the property into a habitable state.
If renovation work is required to bring the property into habitable condition the work must be completed by a French registered builder who must offer the statutory 10 year guarantee on the work. More information can be found on our French Renovation Mortgages page.
Before a French property can be put on sale the law requires that a series of diagnostic tests are completed and the vendor, or the vendor’s agent, must provide a copy of the results called the Dossier Diagnostic Technique. You should ensure that you study the report in detail before making a firm offer to purchase the property because the report may disclose that considerable expense would be needed to bring the property up to current standards.
For a French bank considering whether or not to grant a French property mortgage, location is a vital consideration which often conflicts with the judgement of the applicant.
From a French bank’s perspective the best locations are in the desirable areas of major urban centres where there will be strong property market liquidity and many well financed prospective buyers ready and able to bid for bank repossessions. The worst locations are the remote places with few modern amenities with little or no employment.
For you, these may be just the locations you are hoping to escape from as you search for your French dream home deep in the French countryside.
By choosing a location that is acceptable to the French banks’ underwriters you will maximises your French property mortgage potential and also minimise the rate of interest you will be asked to pay.
Conversely, there are an increasing number of rural locations in central France which the French banks no longer consider as viable for a French property mortgage due to the absence of potential local buyers able to bid for a repossessed bank property.
French banks are becoming more likely to assess the demography of the population surrounding the location of a proposed French property mortgage application before granting a French mortgage.
You will find it much easier to obtain a French mortgage if the demography in the surrounding area shows a young population with above average employment rates and above average income.
Presently the banks discriminate against areas where the average population age is high, where the economic participation rate is low and the average income is below the French average.