France has always been very cautious about its mortgage market. When I first came here I was astounded by the lack of mortgages on offer, I bought my first house in the UK in 1994, I had just left University and had no job (but was looking!) and even then they gave me a mortgage with a 10% deposit. The house wasn’t expensive but it did have a garden and two bedrooms.
I arrived in France in 1999 and started looking for a chalet or apartment to buy near Morzine. I had 40,000 euros in my pocket and felt I should be able to find something. It turned out that the French banks are bound by law to stick within some fairly conservative lending limits. They also seemed to want at least a 30% deposit! They told me then that they could not allow my loan repayments to exceed 33% of my income. So for instance if my wife and I earned 2,000 euros a month, then our loan repayment could not be more than 660 euros a month. To make matters worse we would be expected to pay for the Notaires Fees from our deposit!
It doesn’t take many taps of the calculator to work out that we needed to find a house for less than 140,000 euros.
Notaire Fees and Stamp Duty in this case = 12,000 euros
Leaving 28,000 euros for the deposit
140,000 – 28,000
112,000 required as a mortgage, over 25 years and at a rate (in 2001) of 5.5% = a repayment of 688 euros a month.
Ouch! Then I was told about the 3% redemption penalty, that will stop any thoughts of re-mortgaging!
Well in the long run it turned out that the French philosophy of conservative lending has paid off. They have suffered less house price inflation and (domestically) their banks have not been saddled with the sort of debt and risk that the English and American banks have.
Things have got a bit easier in the French Mortgage market, thanks to low Eurozone interest rates mortgage rates of between 2.5% and 3.5% are available now, deposits as low as 15% or 20% are accepted, variable and interest only mortgages are available, redemption penalties are less common (they still exist on fixed rate mortgages) and there are various providers available, not just the local high street bank.
We are in a good position to point you in the right direction. It really depends on what you are buying and on your current circumstances, we may make an appointment for you at the local bank (they tend to be better with renovations or “tricky” loans) or more often we would recommend an “International” bank. Just ask.
We have some useful tools here to help get to the bottom of some of the mortgage calculations and notaires fees.
The chalet pictured above is not of the chalet we bought! It’s one of the latest chalets we have for sale on the Alpine Property website.
Ferme de Culelin, 2.5m euros in St Gervais
Posted by Gareth 
