Do you need a deposit?

[Crevette]

Perhaps a basic question, but do you need a deposit these days to buy a house? (and if so, how much?)

My bank range through some "amounts I could borrow to buy a house" and all of these did not include putting forward a deposit.

Are the days gone when you needed a deposit to get a mortgage?

Do you getter better deals if you can provide a certain percentage in the form of a deposit?

Many thanks,

-Rob-

[PeterG]

I think you bank is absolutely right. The amounts they are prepared to lend you will depend on your income less any other commitments.  Usually for residential loans, they will go up to 95% of the loan to value. 100% mortgages are available from some banks but you would not received as good an interest rate as if you were borrowing a lower amount.

[Will]

We seem to be talking about two different things here, the deposit paid to the notaire and the down-payment on a mortgage.

It is normal in most of France for notaires or agents to ask for a 10% deposit. This is purely because this is the sum you forfeit if you default on the deal, and it saves a lot of aggravation for the notaires because they do not have to pursue you through the courts - a potential problem when dealing with non-French buyers.

However, there is no rule laid down in law, and if the seller and/or the notaire trusts the buyer and knows they are not likely to disappear, they can ask for a smaller deposit - 5% is not uncommon - or even no deposit at all.

The matter of the deposit normally has no bearing on the price paid, so you would not get a better deal when offering to buy.

When arranging the finance with the bank, although 100% mortgages are possible, they are not very common in France. 90% or less is more usual for a mortgage. But French banks are primarily interested in your ability to pay back the loan, so this counts for more than the percentage borrowed or the condition of the house. They normally want to see that your total borrowings are less than a third of your income, or that you have sufficient assets to cover the value of the loan. Borrowing a smaller percentage may give you access to better interest rates though.