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4. Mortgage Costs
Buyers who are financially comfortable generally will have little difficulty in
obtaining financing from a French bank.
Obtaining a mortgage
To obtain a mortage the borrower must submit an application supported by personal
income tax returns from the last two or more years. A medical examination may be required, especially if the borrower
is over 55 years old (see Life insurance, below).
While the mortgage acquisition process may be simple from an approval point of view,
it can be quite baffling and time-consuming if you do not speak French and are unfamiliar
with French banking customs. Click here
for more information on how JUST FRANCE SALES
can assist you with the mortgage application process.
Loan acquisition fee
Administrative and other fees charged by a French bank typically run 1-2% of the
amount financed. For example, for a loan for 300,000 € you should count on paying
a loan acquisition fee of up to 6,000 €, although it may be less. The fee will be
taken directly from your French bank account on the day of final settlement, or
it may be collected by the Notaire at closing.
Life insurance on the loan
Almost all lenders require that all real estate loans in France be insured so that the
lender is paid in full in the event of the borrower's death. While it is possible
that an existing life insurance policy could be assigned to the bank and offered
as proof of insurance, typically the bank will impose its own policy at fixed rates
as a requirement of granting the mortgage. The insurance premium is added to into
the monthly principal and interest payment.
Older buyers may have to meet
certain medical requirements and may have slightly higher payments. The medical
requirements may include a physical exam and certain blood tests, which may be certified
by a physician in the borrower's home country.
Interest rates and payout period
Residential mortgages in France generally do not exceed 20-25 years, although a longer term is possible. As of early 2008, the
interest rate on a 15-year fixed-interest loan was around 4.7 percent, exclusive
of life insurance costs. `
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