Understanding Types of Mortgages in France

In France, the mortgage market is well-structured with options tailored to income, property type, and the applicant's residency status. Mortgages are available for French residents as well as foreign buyers, under certain conditions. Loans usually have a duration of 15 to 25 years and are repaid through monthly installments, typically including life insurance.

Main Types of Mortgages in France

• Fixed-rate mortgage (prêt à taux fixe): The interest rate and monthly payment remain constant for the life of the loan. Ideal for those seeking stability.

• Variable-rate mortgage (prêt à taux variable): The rate varies periodically, though it usually has an upper limit. It starts lower but can increase.

• Mixed-rate mortgage (prêt à taux mixte): Begins with a fixed rate for a few years, then switches to a variable rate. Combines predictability and flexibility.

• PTZ (Prêt à Taux Zéro): State loan with no interest, aimed at first-time buyers with limited income. It is used as a complement to the main loan.

• Interest-only mortgage: During an initial period (5–10 years), only interest is paid. The principal is repaid afterward. Used in investments or estate planning.

Fixed-rate mortgages are the most common in France due to their stability and low risk. Loans like the PTZ offer additional support to those who qualify. Foreign buyers can access mortgages, although with stricter conditions regarding down payment or income.

Basic Requirements and Lender Conditions

Banks typically require proof of income, a debt-to-income ratio of less than 35%, a clean credit history, and a down payment of between 10% and 20%. Loans are in euros, and life insurance is mandatory in most cases. Non-residents may face more paperwork and slightly higher rates.

How to Compare Mortgage Offers in France

Comparing mortgages in France requires analyzing more than just the nominal rate. You need to consider the APR (Annual Percentage Rate), mandatory insurance, prepayment penalties, and the overall cost of the loan. These factors directly affect long-term affordability.

Key Factors for Comparing Mortgages

• APR (Annual Percentage Rate): Reflects the total cost of the loan: interest, fees, and insurance. It is the best tool for comparing offers.

• Loan Term: Typically between 15 and 25 years. A longer term means lower monthly payments but more total interest.

• Loan Insurance: Mandatory in most cases. Covers death or disability. Varies greatly in cost and coverage.

• Upfront and Hidden Costs: Opening fees, notary (~7–8%), appraisal, and taxes.

• Prepayment Penalties: Many fixed-rate mortgages impose charges for early repayment. It usually amounts to 3–6 months of interest.

Use comparison tools like Meilleurtaux, Pretto, or CAFPI to view different offers. A specialized broker can help you, especially if you're a foreigner. Always review the ESIS (European Standardized Information Sheet) before signing and check if there are any default insurance policies included.

Negotiating Better Terms

If you have stable income, a good down payment, and a good credit history, you can secure better rates or terms. Some banks offer discounts if you direct deposit your salary or take on more products with them. There are also advantages for professionals or young buyers.

If you're self-employed or retired, prepare additional documentation: tax returns, pension certificates, or financial statements. Don't be afraid to negotiate between different banks.

How to Apply for a Mortgage in France

Applying for a mortgage in France involves documentation, precision, and some patience. Although the process is well-regulated, non-residents may require more verifications. It's ideal to start preparing before signing any purchase commitment.

Steps to Apply for a Mortgage

• Loan Simulation: Use online tools or contact a broker to estimate your borrowing capacity.

• Document Preparation: ID or passport, income proof, tax returns, bank statements, and savings proof for the down payment. Self-employed individuals should also include their financial statements.

• Property Appraisal: After signing the compromis de vente, the bank will request an official valuation of the property.

• Loan Offer: The bank issues a formal offer that you must keep for 10 days before signing.

• Final Signing: Conducted before a notary, the mortgage is formalized, and funds are released.

The entire process takes between 6 and 10 weeks. French law includes a 10-day reflection period and buyer protections. Ensure that mortgage approval aligns with the purchase schedule.

Tips for a Smooth Approval

Maintain your credit history, avoid significant financial moves during the process, and keep liquid funds for fees and taxes. If using a broker, find one with international experience. Don't sign any purchase contract without including a financing contingency clause.