Agreements in principle
- Credit: Archant
Jo Cowling helps you get ready for the hunt by securing your potential funds for a purchase before travelling
As summer fast approaches, many of you will be planning visits to France in order to view prospective houses to purchase. It is normal to be both excited and apprehensive about these viewing trips. On the one hand, a great holiday could be capped by you finding your dream property. On the other, if the viewings are unsuccessful they can become a source of frustration.
One thing is for certain: it would be a great shame to find the perfect home, only to be unable to complete the purchase because you have not secured the necessary financing. For that reason, it is wise to start looking into your mortgage options before your viewing trip in order to avoid financing becoming a sticking point for your purchase.
The first recommendation is to look into the mortgages available as early as possible. This is the one key piece of advice when dealing with a new purchase in another country. Pick up the telephone and call a reputable, English-speaking French mortgage broker.
The broker will be able to look into your specific requirements and circumstances and match these up against the criteria and mortgage products available at the various French lenders. This will give you extra peace of mind that financing will be made available to you and give you the facts so that you can budget accordingly.
THE NEXT LEVEL
If you are fully decided on making a purchase in France, you should also move to the next step along the way before making your visit. This step consists of turning the informal correspondence with the broker into a full and official agreement in principle with a French lender. To do so, you are required to complete the application forms and submit a complete set of supporting documentation to the lender. Once in place, the lender carries out the necessary checks and indicates a mortgage pre-approval for up to a certain maximum loan size.
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The advantages involved in obtaining an agreement in principle go beyond just the peace of mind that this will bring you as the buyer in France. It also sends out a very clear message to prospective vendors. Securing financial pre-approval makes you a much safer bet as a buyer who will fulfil the obligations of completing the purchase. You are therefore a more attractive proposition than property seekers without financing and this should play into your hands when it comes to negotiating a price for the purchase.
Once you have secured your agreement in principle, this will remain registered with the French lender almost indefinitely. So even if your first viewing trip does not bear fruit, you just need to contact the bank when you head out to France again. They will inform you if any updated documentation is required for your pre-approval, but effectively most of the legwork has been done by this stage.
If, on the other hand, you do find a property straight away, make sure you keep the broker and bank up to speed. A financial pre-approval can only become a full mortgage if a suitable property is being purchased. As soon as you see somewhere of interest, run the general details past the bank: address, type of property, overall condition of the property etc. Different lenders favour different properties, and it is worthwhile checking that the mortgage provider is satisfied by the prospect of your new purchase. Be sure to send as much information across as possible. You may be able to send photos electronically, or the estate agent could assist with forwarding on the details that they have on file.
Another advantage of the agreement in principle is that it does not tie you in to a particular mortgage product. When you find the property, it may form part of a slightly different project than the one originally envisaged. For example, there may be certain renovation works to carry out or the conditions for letting it out may vary.
These aspects could have a bearing on what mortgage is most suitable for the purchase. You need not worry, however, as it is only when the final mortgage offer is issued that you will confirm which facility you wish to take out. You will have plenty of time to weigh up the options and make the most appropriate decision on this front.
As with so many things, the sooner you act regarding the financing of your French purchase the better. Enquiring about the mortgages available should always form part of the preparations involved in arranging a viewing trip to France. This means that you will be able to budget far more effectively, influencing which properties you draw up on your shortlist. Then when negotiations start, having already secured the bank’s pre-approval will put you in the strongest position possible to get a great price.
So what are you waiting for? If that viewing trip to France is already booked up, pick up the telephone today and contact a French mortgage broker. They will look across all the prospective lenders independently and suggest whose mortgages may be most suitable for you. This will take you one step closer to your dream French purchase, without you even having set foot on French soil.
Jo Cowling is head of the French team at International Private Finance
Tel: 0207 484 4600