Be a non-resident and obtain a mortgage loan:
what you need to know!

You are non-residents and you plan to buy a property in France using a housing loan, it will not be easy but it is feasible. We tell you everything so that you know what to expect and that you put all the chances on your side with your banker.

The impact of your country of residence. Before finding a bank willing to work with non-residents, check that your country of residence is not on the black list or grey list of EU countries.

EU countries blacklist: Fiji, Guam, Cayman Islands, US Virgin Islands, Oman, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, Vanuatu.

Grey list of EU countries: Anguilla, Australia, Bosnia and Herzegovina, Botswana, Eswatini, Jordan, Maldives, Morocco, Mongolia, Namibia, Saint Lucia, Thailand and Turkey

Note: The United Arab Emirates left the list of countries on the Black/Grey List in October 2019.

The overall objective of the EU list is to improve good governance in global tax matters and to ensure that EU international partners meet the same standards as Member States.
The rigorous process for selecting countries is used to assess that they meet three main objectives.

  • Transparency: are international standards for the exchange of information respected?
  • Fair tax competition: Does the country have harmful tax practices?
  • Real economic activity: Does the country’s tax rate encourage artificial tax structures?

By residing in a country of these lists, it will be impossible for you to start a relationship with a French bank.

Finally, and for a different reason, if you are a tax resident in the US, your steps will be difficult (but not impossible). Most French banks are afraid of the US FATCA tax regulation which consists in giving full transparency of the accounts of their customers domiciled in the United States; requiring a lot of reporting work and potentially heavy sanctions.

If your country of residence has not yet been mentioned, you have every chance to obtain financing in France but the road is still long.

Real estate credit, an appeal product. The fall in key interest rates applied by the ECB (European Central Bank) have a downward impact on interest rates and make real estate credit less and less profitable for banks As it is not the most margin-generating product, banks use home loans as an appealing product in order to attract new customers. Once you are a client, you will place your accounts with your income in your new bank, you will “consume” banking products such as credit cards, savings, insurance, and this allows the bank to regain an acceptable level of profitability.

The non-resident, not very interesting because not very profitable. A non-resident will not use his bank account in France with the same intensity as a customer residing in France, he cannot place his income there (although they are sometimes higher than French wages) and therefore will generate very little margin for the bank.
Very often, the bank will refuse to enter into a relationship or they will not hesitate to ask for additional counterparties  ; it can be a trip to France for a physical meeting, the opening of a current account, a savings account or the subscription to the loan insurance within their institution.
Finally, the bank can offer you two main options  to compensate for the shortfall in margin:

  • A credit with a higher interest rate than the average market rate and a significant level of contribution
  • A credit with a competitive interest rate but with a pledge in the bank’s accounts of a value between 30% and 60% of the value of the credit requested

The first step in validating a credit file is compliance. The role of the Compliance Committee is to analyse the potential risk of judicial or administrative sanctions that may be linked to non-compliance with the rules set by the CRBF (Banking and Financial Regulation Committee). The origin of the funds and the constitution of the client’s assets is verified to ensure that there are no links with money laundering, arms, drug, human trafficking or any type of crime, especially in countries where there is an embargo.
Also facing a non-resident case, French banks are facing several difficulties. For example, the guarantee documents usually requested are more difficult to control. Foreign companies do not necessarily draw up pay slips as in France, and these are sometimes very (too) succinct. Also, in the event of a dispute, the banks find themselves in a more delicate position. The implementation of prosecutions is often uncertain outside the territory.
As you will have understood, whether you have a very large financial wealth or a very good income, if your profile is not validated by the compliance committee, there will be no positive follow-up with the bank in question.

The second step in validating a credit report is the Credit Committee. It will finally be the moment when you will talk about money but only if you have signed a compromise, there will be no studies if the project is not fully committed! The banker will ask you to provide all the elements that make it possible to determine the “rest to live”, that is to say the money you have by subtracting your expenses (taxes, rents, credits, pensions) from your income (wages, rents received, dividends, interest). n the end, we will determine a debt rate by integrating your monthly payments if the credit is accepted; a debt rate that would exceed 39% would be refused by the credit committee because considered too risky.
It should be noted here that this process is that of retail banks, a different approach in profile analysis can be considered if you are in discussion with a private bank that will propose you different credit structures.
If you get past the credit committee stage, it means you’re getting to the point, the hard part is behind you.

The commercial proposal and the finalization of the credit. The banker will then send you a commercial proposal with the required counterparties. Some of them are negotiable at the margin and others are not, it depends on the bank knowing that it is in a position of strength because it is not easy to find several proposals when you are non-resident.
As you know, the bank is looking for margins and if it makes you a proposal, it is to develop the medium-term; you can also make him promises of business development to negotiate terms of credit even if it is sometimes difficult to contract things, a gentleman agreement will do the trick.

By combining all the steps, we realize that very few banks in France will agree to finance your project and that is also why the call to a broker will allow you not only to save you time but also money because you will benefit from its agreements already negotiated with the bank At WALDORF PRIVATE OFFICE, the cost of our financing service is largely offset by the gains we will have enabled you to make, both temporally and financially.

A complete credit process takes about 10 weeks, which is why there is a 3-month delay between the day the promise to sell is signed and the day the final deed is signed, the day you become the owner. Anticipate the preparation of items that may be requested by the bank, it will save you time and avoid unnecessary stress in the last straight line, especially after this obstacle course.

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