Whilst in many areas of the world banks are experiencing difficulty in meeting the requirements of potential lenders as a result of the tightening money markets in response to the so called “liquidity crisis” the French banks have not at this time had to pull back there lending as far as first feared.
Loan to value
The maximum loan to value available today is 85-80% of the purchase price inclusive of estate agents fee excluding notary fees (PP&A).
The loan size is subject to valuation of the property to ensure it offers adequate security.
At the highest end of the loan to value 85% of PP&A the interest rates on offer are considerably higher than those at 80% of PP&A.
Typical variable Typical fixed
85% 4.20% (APR 4.8%) 4.55% (APR 5.1%)
80% 3.10% (APR 3.40) 3.60% (APR 3.90%)*
A very slight improvement in rates is possible at lower loan to values.
The payment option range in France is considerably more basic than that on offer in the UK. The products on offer are either pure repayment or interest only; occasionally a product can be arrange to start as an interest only becoming repayment after a pre agreed period (i.e. 5 years interest only followed by 15 years of repayment).
The interest rate calculation is again quite simplistic rates are either variable through out or fixed for periods of 3, 5, 7 years up to a maximum of the term of the borrowing.
Arrangements fees are usually 1% of the mortgage raised, individual banks may apply a cap of 900 – 1500 €.
Life assurance remains compulsory with the majority of French banks.
Notes to the state of the mortgage market.
- This figure is an assessment of the total cost of borrowing and includes the provision for the interest, life assurance, bank arrangement fee and notaries fee for registering the mortgage.
- Your French home is at risk if you do not keep up repayments on a mortgage or other loan secured on it
The sterling equivalent of your liability under a foreign currency mortgage may be increased by exchange rate movements.
For a personalised mortgage illustration: http://www.charleshamer.co.uk/calculator.aspx