How to optimise the conditions of your mortgage when you’re a non-resident ?
At the end of 2018, it is still possible to credit finance a property purchase in France under exceptional conditions. Access to credit at fixed, historically low interest rates and over long periods, largely offsets the increase in property prices.
In this article, we’ll look at some strategies to allow you to optimise your financing conditions and the negotiation of your real estate project.
Your old friend the French banker…
As a general rule, French banks apply specific conditions and scales for non-resident borrowers. If you, or members of your close family, are already “good” customers of a French bank, don’t hesitate to take advantage of your relationship and tell them about your project in advance. An old contact at a bank might allow you to access the same conditions as those offered to borrowers who are tax resident in France.
Unlike online banks (Boursorama, ING, etc.), some mutual banks (CréditAgricole, CréditMutuel, etc.) often prefer the history of a banking relationship and will forget that your earnings are not domiciled in France.
Contribution and counterparties
By default, lenders require a minimum contribution of 20%, plus notary fees, from non-resident borrowers. Increasing the amount of your contribution or placing savings in the books of the lending institution may give you strong negotiating leverage.
The following table summarises the trade-off that exists between the interest rate and the contribution for an example of a purchase of €400,000
| % contribution | Purchase price | Loan amount | Fixed rate for 15 years | Monthly payment | Total contribution including fees |
| 20% | €400,000 | €320,000 | 1.70% | €2,519 | €109,600 |
| 40% | €400,000 | €240,000 | 1.40% | €2,465 | €189,600 |
Conditions precedent : protect yourself differently
In certain geographic areas where the property market is stretched (Paris, Bordeaux, etc.), not including a condition precedent of obtaining a loan in the sales agreement often helps to reassure the seller and to negotiate under better conditions.
The absence of a condition precedent of obtaining a loan does not prevent you from setting up a mortgage to finance the property purchase. In order to minimise the risk of not obtaining a loan or the risk of not being able to set up a loan before the deadline set in the agreement, we strongly advise you to start the process before signing a sales agreement. In particular, you will be able to get an agreement in principle before committing to a purchasing process.
Loan insurance… Thanks, but no thanks
The margins on mortgages are very low and this isn’t by chance. In the range of products marketed by French banks, the main purpose of mortgage lending is to be a loss leader and an anchor product.
Loan insurance, which makes it possible to repay the loan in the event of the death or disability of one of the borrowers, is, on the other hand, one of the high-margin products that must absolutely be negotiated.
We advise you to use insurance policies marketed by specialist companies. The guarantees and pricing will be better suited to the circumstances of non-resident borrowers.
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