moochymoo

Hello,

Does anyone have experience in getting a mortgage in france? I have a UK rental income, would this be sufficient with some deposit to get a mortgage?

is a having a local income compulsory?

thanks

EuroTrash

No simple answer really. Each bank has its own policy. Some insist (for various reasons) on income from a French source. Ideally they like you to have a permanent employment contract in France. Not sure if they would regard an overseas rental income as sustainable enough - what if your tenant leaves, what if you have to carry out major repairs, what if the sterling euro exchange rate heads south. But it helps if you already have an account with a bank and a good record as a customer.
The basic rule in France is that your total monthly loan repayments, including mortgage/car loan etc, cannot exceed one third of your net monthly income. Lending is quite tightly controlled by French law to prevent "surendettement" ie people getting into too much debt. The bank will want to see past bank statements and details of any other loans and regular outgoings that you have.
You can use a courtier which is the equivalent of a mortgage broker in the UK, who will have contacts and may be able to get you a better offer than you could get yourself. Google "courtier immobilier".
Won't your UK bank offer you a mortgage?

moochymoo

Thank you. I had heard of the 30% limit but I'm not sure how strict it is? The properties are mortgage free and approximately 1.2m+ pounds. They generate 5,000 euros in total each month. I don't have any debt.

The option may be that I remortgage them to raise 500k-1m euros. If that is the simplest thing!

The french rates seem so cheap in comparison. The 30% requirement seems way over the top!

EuroTrash

The 30% limit is strictly observed because it's French law. Banks would be guilty of malpractice if they didn't comply. Personal debt isn't encouraged in France, unlike the UK where it is very much encouraged because personal debt fuels the national economy. France introduced this law some years back to protect the consumer. I can't remember the minister's name now but she did a big overhaul of loan and credit regulations because household debt was starting to be a problem.
However, some courtiers seem to find ways to be creative with the figures, if you take my meaning.
But the only way to find out, is if you ask. The way it works with French banks is, you put in an application for however much you want to borrow, they go through your financial situation with a fine tooth comb, then they make an offer of a mortgage "in principle", then once you have found the property you want to buy, you give them details of the property and based on that particular property they either confirm the offer or they don't.
There was a chap on another forum who had an agreement in principle and he found a chateau he wanted to buy that was within his budget but the bank said No we don't give mortgages on chateaux, and they wouldn't budge.

Moses2013

Why not sell one property?

moochymoo

Thank you, I will follow up with a courtier immobilier anyway! I may have to work to close the gap with the 30% restriction. I am a good 30+ years from retirement!

cyrian

The lending restrictions are one reason that French property prices do not increase as they do in the UK.
Bad debt is severely punished in France e.g. if a cheque bounces then your bank can (through the Bank of France) ban you from having ANY bank accounts in France.
Therefore, banks are very cautious in their lending policies.
I deposited 6000€ in cash into my account and I was called into the bank to justify my deposit.
There are newer online banks but the traditional high street banks are very conservative.
It can be quite normal to have weekly and monthly limits on debit cards i.e. there is restricted access to your own money.
In the UK, I have paid for a car with my debit card because I had enough money in my account.
In France, I couldn't even pay the deposit on a car using my debit card because I had reached my weekly limit although I had sufficient money in my account.
I think that you should consider a mortgage in the UK which would also protect you from currency fluctuations.
Please remember that property in France is not an investment.

Chatter Static

Income assessment for a mortgage would be based on a French tax return it's always the first thing they ask for lending based on overseas income can be a challenge every lender treats it differently and since the last financial crisis property tied loans have been harder to get. If you no consider we are in the middle of an even bigger downturn it's probably going to get even harder.

moochymoo

Why sell? I can re-mortgage every 20 years and have the renters pay off my debts! Great ROI. This will also positively help my wealth tax position I understand. I am waiting for my accounting firm to clarify a plan for this however.

moochymoo

I'm used to getting unsecured credit where I currently live. But relocating sounds like I will need a cash purchase for the property, to avoid the red tape. I don't consider it to be any sort of investment.

Chatter Static

It wont be property mindset in France is just not the same as the UK

EuroTrash

I've never understood how anyone other than the bank ultiimately profits from the perpetual debt cycle. Seems logical to me that giving a bank XXXX€ a year, as opposed to not giving a bank XXXX€ a year, only makes sense if (a) you are the bank or (b) you use the money you've borrowed to generate an income that you wouldn't otherwise have access to. When it comes to either mortgaging or not mortgaging a rental property, presumably the landlord charges the same rent regardless of whether or not the property is mortgaged, so I struggle to see why sharing the rent with the bank represents a better ROI for the landlord. But I am aware that UK mindset on debt is different..

Chatter Static

Well obviously you benefit at the end as well because you then own a debt free property which other people have paid for, UK lending polices made it too easy to borrow hence a heavy debt laden society it also hasn't helped people used to obviously speculate in this fashion for long term letting which also provided housing for those not on the housing ladder but then sites like airbnb have thrown this out of kilter.

EuroTrash

Yes but I was thinking about remortgaging a property that you already own outright (the OP said that the properties are currently mortgage free).
For instance my ex owns the house he lives in and the property he rents out. I can't think of any reason why he would be better off taking out a mortgage and paying it back with interest, apart from if he needed the money for another purpose. The OP wrote "I can re-mortgage every 20 years and have the renters pay off my debts! Great ROI." - the point being, presumably, that each successive remortgage is higher due to the increase in value of the properties. But to me that just seems like taking on more debt "because you can", I don't see why it brings better ROI.

moochymoo

I'm not speculating, other than the property price not significantly decreasing. I can get a buy 2 let mortgage on the rental income of around 600,000 pounds if not more. The renters will repay this mortgage. In 20 years I can re-mortgage again, yes the total repayment (if I don't overpay) will be a lot more than 600,000 but the renters will cover it. And if they don't completely cover it, I will have 600,000 today compared to tomorrow which is always better. My rental income is split across myself and my wife to tax is reasonable but we have vehicles for this.

This is also far better than selling as significant capital gains would be due as I have owned the properties for 10 years. I can keep re-using an asset, renting it out to increase the supply of housing in the uk and then borrowing against it.

We have been looking around france last summer and 700k euros does get us far more than we want! I am beginning to think 400k will do the job