When granting a loan, all a bank is interested in is how much of a risk the borrower is. Because they do not live in their home country, as clients, non-residents can be seen as more complicated to manage. Here, we shine a spotlight on the most “expat-friendly” French establishments.
Banks that Definitely do not Lend Money to Non-Residents
None of the on-line banks (Boursorama, ING Direct, Hello Bank, etc.) lend money to non-residents. The same applies to the following banks :
- La Banque Postale
- Crédit Mutuel
- Crédit du Nord
- Société Générale
Banks that are Resolutely Geared towards Non-Residents
You may, on the other hand, find someone willing to discuss loans with you at the following banks :
- Crédit Agricole
- BNP Paribas
- Le Crédit Lyonnais
- La BRED
- La Caisse d’Épargne
The Banque Populaire is another possibility, but the bank insists on borrowers providing a fairly long list of documents including, in particular, one year’s worth of bank statements. At the Crédit Foncier, the expat must visit the property in person with a specialist from the bank. Financing can sometimes cover up to 90% of the value of the property.
What Interest Rate can you Expect as a Non-Resident ?
When dealing with a mortgage request from an expat, French banks are faced with multiple difficulties. Guarantee documents usually requested for example, are more difficult to check. Wage slips issued by foreign companies do not necessarily take the same form as French wage slips, and can sometimes be (too) concise. Also, in the event of a dispute, banks can find themselves in a more delicate position. The pursuit of legal proceedings is less certain outside the home country.
For all these reasons, banks apply higher rates of interest to non-residents. Rates to be expected in Paris for non-residents for a mortgage over 15 years are between 1.55% and 1.70% excluding insurance (October’s figure) and between 1.70% and 2% excluding insurance for a 20-year mortgage (figure at the end of November). Over 25 years, and banks do not generally grant mortgages over a 25-year period, rates are between 2.45% and 2.70% excluding insurance (figure at the end of December). Outside the Paris region, in Lyon for example, the figures will be slightly lower :
- 1.15% over 10 years
- between 1.15 and 1.20% over 15 years
- 1.30% over 20 years
What do Banks Require in Return
Banks don’t hesitate to make additional requests in return for granting a loan to non-resident borrowers. This may involve having to return to France in person for a meeting (Caisse d’Epargne), the opening of a current account or a savings account, or taking out insurance with their establishment to cover the loan. In more extreme cases, certain banks (Banque Palatine) require collateral ranging from 20% to 40% of the total amount of the loan granted, throughout the loan period.
It is important to specify that not all banks insist on making such requests. And when they do, it is only actually true for some of them. In the case of loan insurance cover, if borrowers find it too high, they can negotiate the rate with the bank or go through a broker to arrange an assignment of an insurance policy, for example. Sometimes, the amount of money that can be saved makes this worthwhile.
Insurance Rate and Deposit
For information, 0.15% is an excellent insurance rate for non-residents. A rate of between 0.15% and 0.20% is still good and between 0.20% and 0.30% the rate is reasonable. Rates higher than this are considered decidedly average.
As for a down payment, banks require a deposit representing between 20% and 30% of the price of the property. The personal and professional circumstances of the borrower obviously inform how demanding the banks will be. If you are employed under a French secondment contract or if you have a local employment contract with a well-known multinational company, banks will probably accept a lower deposit.