French MortgagesTwelve Step Guide to French Mortgages

Courtesy of French Mortgage Xpress

The Essential FMX Twelve Step Guide to Buying a French Property Purchase with a French Mortgage

Step 1
You find a property in France and intend to finance the purchase with a French mortgage using no less than a 20 percent down-payment from your own funds The whole process of completing on a French property from the moment you sign the compromis de vente takes around 60 days. Under normal circumstances the formalities for a French mortgage can be in place with a 40 day period.
FMX Advice: Consider appointing your own English-speaking notary to coordinate the transaction

Step 2
You will sign the Compromis de Vente (sales agreement), ensuring that it contains the Clause Suspensive stating that the purchase is dependant on the obtaining of a French mortgage. If the bank or banks declines the loan then all monies including the deposit will be returned to the buyer in full. There will be a time limit for applying for the mortgage stipulated in the compromis de vente. Normally this is around 30-45 days.
Normally the date set for signing of the title deeds of the property are set around two months after signing the compromis de vente. This is the time it takes for the notaries and the authorities to take care of all the due diligence procedures associated with transferring the title deeds of a property.
It is important that the financial details of the operation: the loan amount, the name of the lending bank, the interest rate, the length of the loan are defined in the compromis de vente to avoid problems later. In many cases we suggest you fax a copy of the compromis de vente to French Mortgage Xpress so that we can ensure that the financial details of the purchase are correctly defined to protect your interests.
If you do not intend to obtain a loan, you are expected to write in your own handwriting that you intend to give up your rights under the law. This is not always wise, since should you subsequently decide to obtain a loan, and fail, then you will lose your deposit.
French Mortgage Xpress will describe the different types of loans available to you and will help you to select the best type of loan based on your circumstances and the banks’ lending criteria. French Mortgaeg Xpress will send you a simulation to give you an indication of your monthly payments and will ask you to provide some basic financial details.
At this point you may wish to appoint your own notary to oversee all aspects of the transaction. Contrary to many reports, the appointment of your own notary does not incur any extra costs. French Mortgage Xpress can recommend English-speaking notary services at no extra cost to the purchaser.
FMX Advice: Be wary of signing a compromis de vente without an escape clause in the event of your mortgage not being approved.

Step 3 You complete an application form provided by French Mortgage Xpress for a bank loan along with a medical questionnaire and send it to FMX together with photocopies of the supporting documentation: (List of docs for employed and self-employed people)
The application form and medical questionnaire will need to be returned in original along with photocopies of all of the other documentation required.
FMX Advice: Use the French Mortgage Xpress checklist of documents to be provided. The more complete the documentation, the faster your loan can be processed.

Step 4
Documents received by French Mortgage Xpress. FMX staff check all documents and confirm receipt of documents by e-mail and advise you of any documents still to be provided. French Mortgage Xpress then passes documents on to the lending bank for a “first reaction.”
FMX at this point can arrange the opening of a French bank account.

Step 5
The lending bank will provide FMX with the first reaction. This usually consists of a conditional approval subject to the obtention of any missing documents from the original list. French Mortgage Xpress conveys this report from the bank to you.

Step 6
You supply missing documentation to French Mortgage Xpress which is passed on to French bank. The dossier, once complete, then proceeds to the French bank’s lending committee for final approval.

Step 7
At the same time the bank will authorise an independent evaluation of the property to be purchased. It will be necessary to coordinate with the owner/real estate agent for the independent evaluator to access the property.
FMX Advice: Make sure French Mortgage Xpress has the contact details of all the relevant parties in the transaction in order that we can short-cut any potential problems.

Step 8
Within 10 days of receiving all the required financial information, the lending bank will be able to give a decision of your French mortgage loan application. Often the response is “Yes, subject to medical insurance.

Step 9
Once all the medical formalities have been taken care of the French mortgage offer will be issued and sent by post usually to your normal address. A duplicate will be sent to your notary so that they can start drawing up the final documents for the title deeds. The notary needs a copy of the loan agreement before he/she can draw up the final documents and will at the same time be able to calculate all the notary fees including the land registry fee which is a percentage of the loan amount. The notary will be able to tell you the exact amount of these fees and you should be ready to pay them by French bank cheque on the day of signing.
FMX Advice: Make you’re your local GP completes the medical forms provided by the bank. Most medical officers representing the banks will not accept medical information more than three months old.

Step 10
Once you receive the loan offer contact French Mortgage Xpress who will give you precise instructions on how to complete the acceptation letter and answer any questions you may have about the loan. Remember, under French law, there is an 11 day cooling off period before you can legally accept the French bank’s loan offer.

Step 11
The loan acceptance offer has been returned to the French bank. The bank will transfer the funds you have borrowed to the notary usually in the 48 hours preceeding the date set by you notary for signing the final act. You will arrange for the transfer of the down payment plus notary fees to the notary’s account. The notary is responsible for informing you of the precise sums. Make sure you leave sufficient time for the funds to arrive in the notary’s account; especially if the funds are being sent from abroad. You may wish to use the services of a
specialist foreign currency provider to obtain the best exchange rate. FMX can advise you on this issue.
FMX Advice: Ask French Mortgage Xpress for advice on currency exchange and transfer procedures.

Step 12
Congratulations! Finally you sign at the notary’s office. Be prepared for a minimum of two hours at the office. Usually a translator is provided for a small fee, payable to the notary by French bank cheque on the day. It may also possible to sign by proxy; you should set up this arrangement well in advance with your notary.

Post-Script Your first mortgage repayment will come from a direct debit you have set up with a French bank. Within six weeks the bank will also draw down any bank arrangement fee as stated in the loan offer (usually between 1.200 and 1500 Euro but can be up to 1%). You should make sure there are sufficient funds in the French bank account to cover both the first monthly payment and the bank’s arrangement fee.
Remember your property is at risk if you do not keep up your mortgage payments!