The lending institutions in France have a set mortgage fee against domestic properties. The property must, however, be habitable. This means it must have running water, electricity, central heating and other normal features of a habitable home. Before a bank offers you a mortgage, you will be required to prove that you can renovate the property through submission of formal invoice estimates for the renovation fee. The estimates must be approved by registered French builders who are required to attach the necessary insurance documents.
Loan-to-Value is a ratio that lenders use to determine the amount of loan that a borrower can get, based on the market value of the property in question. Depending on the mortgage size, financial institutions in France are sticklers to the rules in regards to loan-to-value (LTV). In this regard, the lender will give a maximum ratio of between 80% and 85%, depending on the total cost of both the property purchase and the sum of any renovation costs. The lender will also do a survey to help them determine an estimated market value of the property in question. This survey is carried out once all the processes are complete. Note that the LTV rule is also applied to the final loan amount of the final valuation.
Even as you wait for the bank to complete the financing process, it is always advisable to have some money of your own. This is because the process may take longer than anticipated and also, French lending institutions are strict with the upfront deposit as a show of personal contribution and financial stability. The buyer of the property must, therefore, be financially ready to renovate the property in its initial stages. Once the renovations are done, the borrower can attach the invoices and send them to the bank for direct reimbursement.
In conclusion, it is always advisable to read through the fine print when seeking a mortgage from lenders. By working with a mortgage adviser in France, you will have bilingual adviser who will be able to look for the most advantageous product for you.
To find out more contact the team here at HB Mortgages.
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