Explorer450 Posted June 17, 2013 Share Posted June 17, 2013 Hi everyoneAm a forum newbie, so please be kind. Have been reading some other posts on here for info, but this is my first post. Have been dreaming of buying a holiday home in France for some time now, and finally I'm an a position to do it! I've seen some houses online that I quite like the look of that are within my budget, but don't know what the next step is - other than coming to France to view them, which I'm hoping to do in September.What I really want to know about is French mortgages. I have 50% of the budget I've set myself available to put down as a deposit in cash, but I would need a mortgage for the other 50%. I don't know whether I should just approach a French bank, ask the immobilier for help or to use a UK company that will guide me through everything. My French is ok, but not so good that I'd feel confident dealing with solicitors etc.Has anyone else used a UK based agency to get a French mortgage, is it a waste of money or money well spent? Any help or advice would be much appreciated. Link to comment Share on other sites More sharing options...
Clarkkent Posted June 17, 2013 Share Posted June 17, 2013 If you are looking for a holiday home then I assume you live in the UK. This means that the income you will use to service the mortgage will come from your UK earnings.I think that you would be wise to source your mortgage in the UK - a second mortgage on your home, if possible. This means that you will pay currency transaction costs only once. If you are paying in sterling for a Euro mortgage you would have transaction costs every time you made a mortgage payment.In addition, you would be subject to fluctuating exchange rates and planning would be difficult.I think that it is wise to borrow, and service a loan, in the currency of your income. Link to comment Share on other sites More sharing options...
Val_2 Posted June 17, 2013 Share Posted June 17, 2013 Good luck finding a property, there are so many people trying to sell at the moment you could get a real bargain by haggling. Please,please take care when you find a place and do not take what is told to you either in person or on paper as the gospel truth regarding drainage,electrics,guarantees etc and I would suggest, if you can,find a local professional in the building trades or take someone with you to make a thorough inspection. Remember that old properties although lovely,are a continal drain on your resources and need constant attention,plus they are very easily bodged up by unscrupulous sellers whereas a modern new build will be to building standards, need very little doing and leave you time to enjoy it. Also buy for quality not quantity unless you want to be a slave to gardening each and every visit and living isolated also has its problems as you get older too. Coastal is much more expensive than inland and you need to visit when its raining if you find a place you love because winter will be quiet.I also advocate getting a loan in your own country for easiness of communication and for paying it off. If you default in France its a serious matter and you can lose your home within weeks whereas the UK seems a less forbidding state of affairs. Make sure you do a french will regarding your affairs here if you have family who will automatically eventually inherit and maybe subject to all sorts of taxes not being french residents or it being a principal residence.Above all, get everything checked and remember this is France, a totally different culture and environment to buying property and most places will not be "Homes and Garden" UK standard of decor or finish. Link to comment Share on other sites More sharing options...
suein56 Posted June 17, 2013 Share Posted June 17, 2013 [quote user="Clarkkent"]IMHO I think that you would be wise to source your mortgage in the UK - a second mortgage on your home, if possible.[/quote]If you have to have a mortgage then I think Clarkkent's advice is sound, especially if you have plenty of equity in your UK property.Otherwise I believe it is far safer to be a cash buyer for a holiday home ie no need for a mortgage, as the running costs have the potential to be much more than you think.Also, do you really want to spend your holidays always in the same place ?Sue Link to comment Share on other sites More sharing options...
Sprogster Posted June 17, 2013 Share Posted June 17, 2013 Explorer450, in the current French economic environment, as a non French resident finding a mortgage for a second home in France will be very difficult. In fact I believe most of the French banks will not currently lend to non residents. If you do find a lender in France, you need to be aware that there is an additional lending criteria you have to comply with, in that servicing your total debts must not exceed more than a third of your income. This includes car loans and credit card debts. Therefore, if you already commit a third of your income to servicing debt such as a mortgage in the UK on your main house, legally the French bank cannot lend to you more.Your best bet and probably only realistic option in the current credit squeeze in France is to raise a second mortgage with a UK lender on your UK property if you have enough equity in the property.Whatever you do don't rush and take your time to fully familiarise yourself with the areas in France you intend to buy and this includes visits during the winter, when things can look far less appealing. This is especially relevant now with the weak French property market, as prices are forecast to continue to fall and if you make a mistake buying trying to re-sell could prove very difficult and expensive. Link to comment Share on other sites More sharing options...
Explorer450 Posted June 17, 2013 Author Share Posted June 17, 2013 Thanks everyone for your replies. Sorry, should have said that yes, I am a UK resident, so it will be my income here in the UK that will service any mortgage I take out to buy a property in France. I had thought that a French mortgage would be a better idea, as any future risk associated with defaulting in payment would only put the French property at risk not my main UK home. Not that I foresee ever defaulting, my finances are stable, but you never know what the future will bring?In the short term, our plan is to use the French property as a holiday home but also to rent it out seasonally. Then in the longer term we would look to start and spend more time there before making the move permanently when we retire, so don't worry Sue, I'll still get to take holidays elsewhere too.And in terms of French banks not lending to non-residents, that doesn’t seem to be the case. I sent an enquiry to the international arm of the French bank BNP Paribas yesterday and got a reply today. Based on the information I sent them they've already made an 'in principle' offer.Has anyone actually taken out a French mortgage? Would still be interested to know if it worked for you? Link to comment Share on other sites More sharing options...
Sprogster Posted June 18, 2013 Share Posted June 18, 2013 The risk in borrowing in France in Euros where your earnings are in sterling is the currency risk, in that if the £ falls further against the Euro, you're borrowing cost in sterling increases. As a result it is generally considered more financially prudent to borrow in your currency of risk, which is your income currency.BNP International is probably the exception amongst French banks at the moment, but they will expect you to avail yourself of other services they provide like investments and life insurance, as they are using lending to hook wealthier non resident clients, so I presume you are talking serious money! Therefore, I would not put too much credence on a 'in principle offer' because until you have identified a specific property and completed all the paperwork the bank's credit committee would not have been involved and only they can sanction an offer. If you defaulted on a French mortgage it would not stop the French bank pursuing you and your assets in the UK, which has become legally easier to do recently. Especially, if you are asked to also give a personal guarantee, which I expect you will be asked to do. Link to comment Share on other sites More sharing options...
Val_2 Posted June 18, 2013 Share Posted June 18, 2013 As with any loan here, even though you may get a principal YES upon enquiring, the actual decision will come from much higher up at regional level. As said in last post,unless you are spending probably more than €400,000 upwards you should do some serious investigation into the loan system in France which cannot be a repayment of more than one third of your STABLE monthly income for which you will have to proove this on paper among other things. Take into account too, the insurance which you will need to have on top and the cost of putting a mortgage into the system which could be thousands too (CA charged us over €250 just for the paperwork on a loan of €20k recently). Link to comment Share on other sites More sharing options...
Sprogster Posted June 18, 2013 Share Posted June 18, 2013 val2, BNP International is a bit of an oddity in that it comprises its non French operations in London and Jersey for example and deals mainly with wealthy non French resident clients and institutions. The OP is almost certainly dealing with their UK operation, who based on an intial internet enquiry would have given no more that an indication, rather than a offer as such, as to what they could lend based on their lending criteria and intial information provided by the enquirer. Nothing would be referred for more formal approval until account opening forms had been submitted, approved and a property identified.You are quite right though in that to most British people the financial scrutiny you are subject to by French banks in approving a loan can come as a shock and the affordability one third of income test is strictly enforced.One thing I forgot to mention to the OP is that from my experience with a French mortgage I obtained ten years ago, the lending bank in France insisted as a condition of the mortgage that I took out Life Assurance through them to cover repayment if I died during the ten year period of the loan and would not accept an assignment of any of my existing life assurance policies, as they were not French. This involved a thorough medical, which I doubt I would pass these days! How common this is these days I do not know, but if it is it is a point bearing in mind if you have a medical history that could make this problematical or expensive. Link to comment Share on other sites More sharing options...
Val_2 Posted June 18, 2013 Share Posted June 18, 2013 My son has taken out a full life insurance cover to guarantee his current loan will be paid off if he dies as I cannot and the same with his car loan the other year. We took out the life insurance on the new truck OH bought four months before he suddenly died and good job we did as it paid off the loan and left me with a vehicle which I could sell on. I would urge anyone who takes out any sort of loan here to have the life insurance as well and it can be as little as €8/month to cover the initial repayment in the event of death or injury resulting in loss of livelihood etc. However check the details because on all our insurance covers, the policy and repayment of the loan had to be up and running for not less than two full months before any claims would be considered and paid out on! Link to comment Share on other sites More sharing options...
Val_2 Posted June 18, 2013 Share Posted June 18, 2013 Forgot to mention that for all these bank loans NO medical or medical questions were demanded or carried out. Link to comment Share on other sites More sharing options...
Sprogster Posted June 18, 2013 Share Posted June 18, 2013 The medical requirement comes down to the size of a loan and would never be required for a personal or car loan. However, mortgages are a different kettle of fish as the amounts are usually much more substantive and the banks want to avoid a situation where for example the surviving spouse has to sell the property to pay of the mortgage, as they can no longer afford the repayments on their sole income. Link to comment Share on other sites More sharing options...
idun Posted June 18, 2013 Share Posted June 18, 2013 When we got our last loan we got from our french bank in around 2004 they made it perfectly clear that we had to take insurance with it, BUT they also asked medical questions too. My husband had had some surgery the previous year and they wanted to know all about that. I don't think that we had medical questions for all the other loans we had over the years, but we certainly did for the last one. It didn't surprise me that they did incidentally.edit not for a mortgage, but around 7000€, what it was for, I'm not sure now. Link to comment Share on other sites More sharing options...
woolybanana Posted June 18, 2013 Share Posted June 18, 2013 There have been rumours of a possible 15% devaluation of sterling by the new governor of the Bank of England. This might be a serious consideration in any plans you have made to borrow money.May I put in my two pennyworth which you are quite entitled to take with a pinch of umbrage and a large dose of salt. Never borrow money to finance a second home, particularly abroad. It is an unnecessary anxiety and risk and you will never get your money back. Just my thoughts. Link to comment Share on other sites More sharing options...
nomoss Posted June 18, 2013 Share Posted June 18, 2013 I am not familiar with costs in the UK, but I believe the set-up charges - from the bank and also taxes and Notaire's fees - are considerably more than in the UK.There are also charges and Notarial fees for completing the mortgage and removing the charge against the property. Link to comment Share on other sites More sharing options...
Quillan Posted June 18, 2013 Share Posted June 18, 2013 [quote user="woolybanana"]May I put in my two pennyworth which you are quite entitled to take with a pinch of umbrage and a large dose of salt. Never borrow money to finance a second home, particularly abroad. It is an unnecessary anxiety and risk and you will never get your money back. Just my thoughts.[/quote]As an example a house across the road from me was bought for €250k six years ago, had about €30k of work done to it and is now on the market for €205k (with not a sniff of a buyer) and that's pushing it a bit. The UK and Spain are not the only places to suffer from a devaluation in property prices. Link to comment Share on other sites More sharing options...
YCCMB Posted June 18, 2013 Share Posted June 18, 2013 [quote user="Quillan"]The UK and Spain are not the only places to suffer from a devaluation in property prices.[/quote]Don't kid yourself about the UK. Maybe in parts, but where I live - and, more to the point, where I'm trying to live, this devaluation of which you speak is definitely NOT happening. Link to comment Share on other sites More sharing options...
Russethouse Posted June 18, 2013 Share Posted June 18, 2013 [quote user="woolybanana"] There have been rumours of a possible 15% devaluation of sterling by the new governor of the Bank of England. This might be a serious consideration in any plans you have made to borrow money.May I put in my two pennyworth which you are quite entitled to take with a pinch of umbrage and a large dose of salt. Never borrow money to finance a second home, particularly abroad. It is an unnecessary anxiety and risk and you will never get your money back. Just my thoughts.[/quote] The one and only time we went to a French Property exhibition we were given similar advice, we didn't go ahead and over the years I've come to think we made the right decision. The only think that may tempt me now would be an apartment that I could lock up and forget if need be, but we're all different and if circumstances had been different, who knows..... Link to comment Share on other sites More sharing options...
Quillan Posted June 19, 2013 Share Posted June 19, 2013 [quote user="You can call me Betty"][quote user="Quillan"]The UK and Spain are not the only places to suffer from a devaluation in property prices.[/quote]Don't kid yourself about the UK. Maybe in parts, but where I live - and, more to the point, where I'm trying to live, this devaluation of which you speak is definitely NOT happening.[/quote]AS you say "NOT" where you live but as you also said "Maybe in parts" so there is some devaluation across the UK. In some areas it is pretty bad as well. Link to comment Share on other sites More sharing options...
NickP Posted June 19, 2013 Share Posted June 19, 2013 [quote user="Quillan"]AS you say "NOT" where you live but as you also said "Maybe in parts" so there is some devaluation across the UK. In some areas it is pretty bad as well.[/quote]Keep digging Q you may eventually be right. Why is it that certain ex pats, and every forum has it's quota, constantly try to find fault and problems in the UK, wishful thinking; and trying to convince themselves they haven't burnt their boats? [:D] Link to comment Share on other sites More sharing options...
Sprogster Posted June 19, 2013 Share Posted June 19, 2013 From what I am reading in the UK financial press is that the recently announced UK government loan guarantee scheme for first time buyers risks creating another housing bubble, as average prices in the UK are starting to strenghten. In the South East & London it is a different world with prices continuing to rocket!As for the exchange rate the cited 15% forecast depreciation of the £, is against the US$, as most currenvy analysts are not forecasting a major downward correction against the Euro. mainly because the Euro is forecast to weaken in parallel against the US$. Link to comment Share on other sites More sharing options...
YCCMB Posted June 19, 2013 Share Posted June 19, 2013 Well, Quillan, I've googled this for you, as I happened to glimpse the front page headline in today's Daily Express as I was buying something in the supermarket this evening:[url]http://www.express.co.uk/news/uk/408625/House-prices-rise-by-9-000-average-value-soars-to-238-000[/url].As I'm currently in the middle of a house sale/purchase, I can vouch for the fact that the housing market in my area is not in decline. It would appear that this is a general, rather than a local trend. But hey, if you say different..... Link to comment Share on other sites More sharing options...
Quillan Posted June 20, 2013 Share Posted June 20, 2013 [quote user="You can call me Betty"]Well, Quillan, I've googled this for you, as I happened to glimpse the front page headline in today's Daily Express as I was buying something in the supermarket this evening:[url]http://www.express.co.uk/news/uk/408625/House-prices-rise-by-9-000-average-value-soars-to-238-000[/url].As I'm currently in the middle of a house sale/purchase, I can vouch for the fact that the housing market in my area is not in decline. It would appear that this is a general, rather than a local trend. But hey, if you say different.....[/quote]Not me but the Nationwide. The average UK house price as of the first quarter of 2013 is still, on average 18 to 20% down on Q4 of 2007 when it peeked depending on if you want to take inflation in to account or not according to them. So if you say that house prices have risen in the last four years then it would be correct as it was in Q1 of 2009 that they bottomed out, according to the Nationwide that is. Of course some areas in any country have particular demands and have not suffered. Even in Spain there are one or two areas where house prices are still going up and demand massively outstrips supply. Link to comment Share on other sites More sharing options...
YCCMB Posted June 20, 2013 Share Posted June 20, 2013 So I assume that what YOU are saying is that the UK was suffering from a devaluation in property prices five years ago? When it peeked, what did it see?[:D] Link to comment Share on other sites More sharing options...
Quillan Posted June 20, 2013 Share Posted June 20, 2013 I am only repeating from a reputable source. It's not me that is saying anything. You do seem to have a problem understanding Betty, perhaps it is the strain of buy, selling and moving. Anyway the source I am quoting from is below and you can see for yourself, if you feel they are wrong feel free to contact Nationwide and correct their mistake. Lets be honest for a minute, from your blog you give the impression that you live along the Thames or very, very close to it. Knowing the Thames quite well (kept a boat in Penton Hook Marina for many years and have lived in Shepperton and Putney a long time ago) I know it is a desirable area in which to live (Thames Valley etc) so yes the prices there will continue to rise there. They may of 'treaded water' for a little while but they will always go up rather than down. However other parts of the UK are not so lucky, some areas have seen massive declines in prices and these figures are based on an average. From the BBC so far this year Stockton-on-Tees for instance has seen a fall of -6.5%, County Durham -6.8%, Cumbria (Lake District) -5.9% and the list goes on, I just picked at random. Where you live, as a general area, prices have gone up, according to the BBC, by an average of +13% this year alone and some parts even more. But gone up from what? that's the question. If you said 1940 for example well of course they have but house prices have crashed twice and the most recent was in 2007/8 so any number you pick after 2007/8 will be an increase yet it might not be back at the pre crash level.http://www.housepricecrash.co.uk/indices-nationwide-national-inflation.phphttp://news.bbc.co.uk/2/shared/spl/hi/in_depth/uk_house_prices/html/houses.stm Link to comment Share on other sites More sharing options...
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