Getting a mortgage for your property in France.

This is the second part of a series of articles related to the French property mortgage market.
By Alan Tyrrell.

Getting a mortgage to buy a property in France need not be intimidating, as long as you are sensible and take precautions. You must seek independent professional advice, and be aware that there will be differences between the UK and France regarding property and mortgage law. There will also be variations in practice, customs and local regulations. This is one reason why many British people decide renting property in France long term, is the way to go before buying.

If you are troubled by the prospect of buying a French property using a French mortgage lender, then you could raise capital on an existing property in the UK, as long as there is sufficient equity in the property you intend to use. This may be an easy option because generally the loan will be in Sterling, and the cash from the equity of a UK property is released quickly, accelerating the purchase of your French home. You must be careful of using this option, as it may present some risks, especially if specialist independent legal advice isn’t sought.

If raising the mortgage for your French property in the UK is not an option, or you prefer to look for a deal in France, then consider taking out a mortgage secured on the French property from an overseas lender. One advantage with this route is that the lender will usually carry out checks on the property themselves. They will ensure that a proper legal title exists, that the property is registered in the buyer’s name and that a valuation of the property takes place. They will also check other issues such as whether proper planning permissions have been obtained or that building licences are correct.

Taking a mortgage with a French lender is fairly straightforward, especially if you use an overseas mortgage specialist. They will be familiar with and understand French lenders. They will also know the restrictions and administration requirements, which can save the buyer time, cost and hassle.

This is especially valuable if you intend to buy a property in France to rent long term and time is of the essence. There are many British people who make a living from the French property rental market. They buy a number of properties over a period of time and in summer rent them to holiday makers at very high margins, and in the quieter months, they capitalise upon the market for renting property in France long term, which is aimed at those wishing to buy in France but who decide to rent a property long term while they find what they want to buy. Another benefit is, an overseas mortgage specialist will generally work with other local professionals, such as lawyers, surveyors and currency exchanges. But remember things rarely move in France as quickly as you'd expect.

There is little difference between UK and French mortgage lenders. Both use property as security and have set criteria regarding eligibility for securing a mortgage. Interest rates are also set by the lenders, and are influenced by the Bank of England for UK lenders or the Euribor for French lenders.

As with UK mortgages, if you enjoy a fixed rate for an introductory period on you mortgage, you are liable to be penalised, with extra charges for paying it off before the end of the ‘fixed rate period. So, if you are anticipating paying off your mortgage early, think hard about fixed rate offers.