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Banks scrutinising borrowers finances

GETTING a mortgage is becoming harder.

The number of loans being granted to people to buy homes has plummeted - 35% less in January and February compared to last year, and around 40% in March.

Several factors are involved. For a start it is common for people to hold off buying in a pre-election period, due to uncertainty.

What is more, the government interest-free loan for first-time buyers is for new-build property only as of this year.

Reportedly however, banks - and Crédit Logement, which provides guarantees that are typically taken out as part of a French property loan (it steps in if you do not pay) - are also reported to be applying lending rules more strictly.

The number of loans being refused by Crédit Logement has been increasing, due, a spokeswoman said, to factors like the would be borrowers having no deposit, or being too heavily in debt. If you want to buy, it is now rare that banks will offer 100% loans (or 110% in the case of the notaires’ fees being covered). A deposit of at least 10-20% on top of the notaires fees is now usual.

Your “banking behaviour” and debt levels are also likely to be scrutinised. It is therefore best to avoid being overdrawn in the months before seeking a loan or having debt levels of more than around 35%.

Loans of more than 20 years are also becoming hard to obtain. On the plus side, interest rates have slightly reduced.

Resident or second-home owner in France?
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