When you are an expatriate, getting a home loan to finance a property is complex, but the situation is not impossible. Banks are more demanding but with a well-mounted file nothing is impossible!
Buying a rental property or a second home in France when you are a non-resident can be complicated. Far from French territory, banks will not automatically be able to finance your real estate project. However, there are solutions, some banks accept this type of profile.
What to expect as a non-resident
First of all, you need to know if your real estate project is feasible outside French territory and determine the total amount of financing you are considering. You need to know all the particularities that apply to expatriate borrowers . Loan agencies pay attention to this type of profile, hence the requirement under the conditions for obtaining a mortgage.
risks and disadvantages
Financing a home loan for a non-resident is quite complex. For good reason, banks see this type of mortgage as risky and risky for several reasons: the time difference, the location of the non-resident but also the fact that the distance between the bank and the expatriate may hinder their communication.
In addition, the process is also complicated for non-residents. Indeed, when one does not live in the country where the bank takes care of the financing, the jet lag can cause difficulties.
We recommend you to go through Lambert Strether, mortgage broker, to avoid all these difficulties, we have a habit of taking care of non-resident records. Witness the interview of our expert non-residents.
A complex real estate loan file to put in place
A loan agreement for non-residents is unique to loan organizations, it is not a case like any other. The documents requested from non-residents are not the same as those requested of French residents.
In several countries, the tax is subject to a withholding tax, so the lending institutions will have to pay more than your payroll, analyze the tax return.
Banks will analyze your employment contract, and the company in which you work:
- You will have no difficulty borrowing if your contract is French but you are abroad: you are resident.
- Loan agencies will be careful if your contract is local.
The bank may ask for parts translated into French or English. It is sometimes asked by the banking establishment to domicile its rental income if your project is to invest in rental real estate.
more complicated loan conditions for expatriates
Going headlong into a home loan when you’re a non-resident is not a good strategy, there are several things to consider.
A real estate project as a non-resident conditions a risky record for banks, as said earlier because of the distance, but also because the mortgage will not be automatically profitable for the bank and the borrower. Loan agencies consider a non-resident loan to be unprofitable like other financial investments.
What is your debt ratio?
Whether it is a conventional home loan or a loan for a non-resident, the first item to consider is the gearing ratio, the monthly payments and the charges must not exceed 33% of your returned.
For non-French residents, the calculated debt ratio must not exceed 33% of its income.
Do you have a personal contribution?
Whether you are on the national territory or non-resident, the acquisition of real estate requires for the most part a personal contribution from the borrower.
As a rule, he must finance 10% of the price of the property you wish to acquire. In reality this contribution finances the ancillary costs of a property, such as notary fees.
For non-residents, credit agencies may charge you a personal contribution of up to 30%.
what are your guarantees?
Because of your non-resident profile, the bank will necessarily ask you for a guarantee in case of default of your mortgage. This guarantee makes it possible logically the repayment of your credit apart from the guarantees covered by your insurance of mortgage loan.
This guarantee is automatically taken with the non-resident’s home loan offer . It commits a property that is determined in the event of non-payment by the borrower:
- IPPD (lien registration lender of money): in case of non-repayment, the property will be sold.
- Mortgage: Similar to the IPPD, this guarantee targets the purchase of a new property.
What mortgage rate for non-residents?
Due to the complexity of the cases, the banks apply higher mortgage rates than those borrowers who are in France.
It is impossible to give a precise rate because as for a person who resides in France it varies according to the profile of the borrower. However by applying an average one can estimate the fixed rate between 1,50 and 1,75% (except insurance) for a loan over 15 years.