Step 1
You find a property
in France and intend to finance the purchase with a French mortgage using no less than a 20 percent down-payment from your own funds. The whole process of completing on a French property from the moment you sign the compromis de
vente takes around 60 days. Under normal circumstances the formalities for
a French mortgage can be in place with a 40 day period.
FMX French Mortgage
Advice: Consider appointing your own English-speaking notary to coordinate the
transaction
Step 2
You will sign the Compromis de Vente
(sales agreement), ensuring that it contains the Clause Suspensive stating that
the purchase is dependant on the obtaining of a French
mortgage. If the bank or banks declines the loan then all monies including
the deposit will be returned to the buyer in full. There will be a time limit
for applying for the mortgage stipulated in the compromis de vente. Normally this
is around 30-45 days.
Normally the date set for signing of the title deeds
of the property are set around two months after signing the compromis de vente.
This is the time it takes for the notaries and the authorities to take care of
all the due diligence procedures associated with transferring the title deeds
of a property.
It is important that the financial details of the operation:
the loan amount, the name of the lending bank, the interest rate, the length of
the loan are defined in the compromis de vente to avoid problems later. In many
cases we suggest you fax a copy of the compromis de vente to FMX so that we can
ensure that the financial details of the purchase are correctly defined to protect
your interests.
If you do not intend to obtain a loan, you are expected
to write in your own handwriting that you intend to give up your rights under
the law. This is not always wise, since should you subsequently decide to obtain
a loan, and fail, then you will lose your deposit.
FMX will describe the
different types of loans available to you and will help you to select the best
type of loan based on your circumstances and the banks' lending criteria. FMX
will send you a simulation to give you an indication of your monthly payments
and will ask you to provide some basic financial details.
At this point
you may wish to appoint your own notary to oversee all aspects of the transaction.
Contrary to many reports, the appointment of your own notary does not incur any
extra costs. FMX can recommend English-speaking notary services at no extra cost
to the purchaser.
FMX French Mortgage Advice: Be wary of signing a compromis
de vente without an escape clause in the event of your mortgage not being approved.
Step
3
You complete an application form provided by FMX for a bank loan
along with a medical questionnaire and send it to FMX together with photocopies
of the supporting documentation: (List of docs for employed and self-employed
people)
The application form and medical questionnaire will need to be returned
in original along with photocopies of all of the other documentation required.
FMX
French Mortgage Advice: Use the FMX checklist of documents to be provided. The
more complete the documentation, the faster your loan can be processed.
Step
4
Documents received by FMX. FMX staff check all documents and confirm
receipt of documents by e-mail and advise you of any documents still to be provided.
FMX then passes documents on to the lending bank for a "first reaction."
FMX
at this point can arrange the opening of a French bank account.
Step
5
The lending bank will provide FMX with the first reaction. This usually
consists of a conditional approval subject to the obtaining of any missing documents
from the original list. FMX conveys this report from the bank to you.
Step
6
You supply missing documentation to FMX, which is passed on to French
bank.
The dossier, once complete, then proceeds to the French bank's lending
committee for final approval.
Step 7
At the same time the
bank will authorise an independent evaluation of the property to be purchased.
It will be necessary to coordinate with the owner/real estate agent for the independent
evaluator to access the property.
FMX French Mortgage Advice: Make sure
FMX has the contact details of all the relevant parties in the transaction in
order that we can short-cut any potential problems.
Step 8
Within
10 days of receiving all the required financial information, the lending bank
will be able to give a decision of your French mortgage loan application. Often
the response is "Yes, subject to medical insurance.
Step 9
Once
all the medical formalities have been taken care of the French
mortgage offer will be issued and sent by post usually to your normal
address. A duplicate will be sent to your notary so that they can start drawing
up the final documents for the title deeds. The notary needs a copy of the loan
agreement before he/she can draw up the final documents and will at the same time
be able to calculate all the notary fees including the land registry fee which
is a percentage of the loan amount. The notary will be able to tell you the exact
amount of these fees and you should be ready to pay them by French bank cheque
on the day of signing.
FMX French Mortgage Advice: Make you're your local
GP completes the medical forms provided by the bank. Most medical officers representing
the banks will not accept medical information more than three months old.
Step
10
Once you receive the loan offer contact FMX who will give you precise
instructions on how to complete the acceptation letter and answer any questions
you may have about the loan. Remember, under French law, there is an 11
day cooling off period before you can legally accept the French bank's loan offer.
Step
11
The loan acceptance offer has been returned to the French bank. The
bank will transfer the funds you have borrowed to the notary usually in the
48 hours preceeding the date set by you notary for signing the final act.
You will arrange for the transfer of the down payment plus notary fees to the
notary's account. The notary is responsible for informing you of the precise sums.
Make sure you leave sufficient time for the funds to arrive in the notary's account;
especially if the funds are being sent from abroad. You may wish to use the services
of a specialist foreign currency provider to obtain the best exchange rate. FMX
can advise you on this issue.
FMX French Mortgage Advice: Ask FMX for
advice on currency exchange and transfer procedures.
Step 12
Congratulations!
Finally you sign at the notary's office. Be prepared for a minimum of two hours
at the office. Usually a translator is provided for a small fee, payable to the
notary by French bank cheque on the day. It may also possible to sign by proxy;
you should set up this arrangement well in advance with your notary.
Post-Script
Your first mortgage repayment will come from a direct debit you have set up with
a French bank. Within six weeks the bank will also draw down any bank arrangement
fee as stated in the loan offer (usually between 700 and 1200 Euro). You
should make sure there are sufficient funds in the French bank account to cover
both the first monthly payment and the bank's arrangement fee.
Remember
your property is at risk if you do not keep up your mortgage payments!
