Hello Jonathan
You'll find the French banks work to very different criteria than the banks in UK, and they are far stricter - keeping to set guidelines that have been laid down by the Banque de France.
Although many will say that you can get 'In Principle' decisions .... Yes you can .... But .... the decision will not stand until a formal mortgage application file has been submitted and underwritten.
By truthfully answering a few questions about your income and outgoings, anyone involved in arranging mortgages with French banks will be (or should be) able to tell you within a few minutes, the maximum amount mortgage you can afford.
All mortgages from French banks are full status, meaning that a lot of documentation has to be provided to support a mortgage application. Obviously the paperwork will have to include ID, proof of income, annual income tax notification (such as P60's in UK) or tax returns, the latest statements of any borrowings, and 3 months bank statements (that's statements of all your bank accounts).
All the documentation is thoroughly checked and cross referenced. Income being paid into the bank, payments being made for mortgages, loans, credit cards etc are clearly visible on bank statements. If there are seen to be any regular payments you will asked to explain and provide proof. If there are transfers between other bank accounts, you will be asked to provide those banks accounts as well.
Basically they are taking a financial snapshot of you over the latest 3 month period.
They are ensuring that you keep within the income vs expenditure limit.
The banks keep to a set guideline to ensure a person can afford their mortgage, in that they allow only one third of monthly income to be used to service the monthly cost of any existing financial borrowings or commitments.
Borrowings/Commitments:
Mortgages. Rent if you are a tenant. Other loans. Student loans. Credit card repayments if you do not clear the balance every month. Maintenence payments to a former spouse/child. Payment of court orders.
To underwrite a file properly takes time, not only for a person at the bank, but also you will have put in your time to provide copies of all that documentation.
Depending on what type of property you are buying and for what reason, it may be months before you find something that is ideal for youself, by which time all the documentation is out of date, and circumstances may have changed. The bank has to be absolutely certain, and up to date information will have to be provided all over again.
A change in circumstances could be cause by an Increase or Decrease in ....
Income. Expenditure. Interest rates. Currency exchange rates.
The interest rate can vary from bank to bank and also will depend on what type of mortgage product you are wanting.
Usually C&I Repayment has the lowest interest rate. Short term fixed interest rate is next. Interest Only a bit higher. Fixed for the long term usually the highest.
I hope that helps, but please, ask more questions if you wish.
Kind Regards
Carole Bayliss
mortgagefrance.com
