France’s lending system is very different than the UK’s system. There is no credit scoring data so applications are assessed on proof of income and whether the borrowers meet the local criteria.
The key criteria is the debt to income ratio (taux de endettement). It must not be over 33% (although it needs to be said that some lenders can be more flexible, especially when dealing with high net worth clients). The calculation will include your new mortgage payment plus existing monthly debt payments (mortgages, rent for residence, car loans, personal loans, alimony or maintenance). As an example if a buyer’s UK mortgage is £700/month, and the proposed French mortgage is £500/month (so £1200 in total), the buyer’s income needs to be at least £3600/month.
Should you have rental income, French lenders usually only count 70% for the calculation (a rental income of £500/month counts for £350). The second criteria is the disposable income (Reste à vivre). It is the money left to spend each month after all debts are serviced. The more people in your household, the more disposable income required.
Finally, French banks will look at the value of your assets net of debt including real estate, savings plans, life insurance, stocks or other investments.
All the information provided to the French banks must be backed up with documentation to justify the revenues, debts and assets declared.
Most lenders in France will let you borrow 80% of the value of your property (for existing or new build) although it is sometimes possible to borrow up to 100% of the purchase price (in that case the deposit required is only the legal fees + estate agent fees).
Nicolas Gandrille, Director, ACE Rodez, ACE Albi
nicolas.gandrille@rodez-acecredit.fr