Financing the Purchase of a French Property

If you are fortunate enough to have cash available then you can skip most of this section but please remember that you will need to have a 10% deposit ready when you agree to make a purchase so you may need to check that part of your funds are liquid before you go house hunting in France.

It is perfectly possible to obtain a French mortgage for part of the value of your property purchase. If you are looking to raise up to 80% of the funds in this way there will be few problems arranging a fixed or variable rate mortgage with a French bank or one of the UK banks that specialises in mortgages on French properties. One thing to remember is that purchasing most properties in France will incur legal fees of around 7% and these are not mortgagable.  A mortgage loan is available for either a secondary or principal home in France, but, remember, if the house will be your main residence you must have an income stream in France from pensions or emplyment to cover the repayments. For a secondary home you may alternatively use the equity in your existing UK property to finance the purchase with a second mortgage. Mortgage loans are difficult, if not impossible, to obtain on income generating properties such as gite complexes or bed & breakfast houses, particularly if the income to be generated is intended to repay your mortgage.

You might be concerned about currency exchange rates? Well if your income is in UK Sterling but your mortgage is payable in Euros, the precise amount you will have to pay your French bank to repay a mortgage is going to vary depending upon the prevailing exchange rate and could be different every month. You will also have the cost of the international funds transfer every month.  You may wish to use a currency broker to arrange say quarterly transfers to reduce this cost.

Fixed rate mortgages are easier to arrange in France than Britain. These tend to be at a premium to the current variable rate but you will know how exactly how much you will have to pay each month for the duration of the loan. Some French banks may offer an option to split a loan between fixed and variable rates allowing you to benefit when variable rates are low and to partially protect your payments if rates climb.

If you are planning to move to France as your principal place of residence then despite the potential difficulties it would be better to sell your existing UK house before house hunting in France. The reasons will become clearer, but when you have found your French dream house you will be expected to commit to buying it and few French house owners are likely to agree to wait while you arrange the sale of your existing home.