GETTING A FRENCH MORTGAGE: PART DEUX #10

 

 

To recap:

• You have a banker, not a bank.
• Bring every piece of paper that you own.
• French bankers don't negotiate like American bankers.
• You don't actually apply for a mortgage until you've been approved.
• You are not approved until the regional office signs off.
• There's a waiting period. 

And don't forget, the banker can get COVID and let your paperwork sit on his desk for a couple of extra weeks. That's where we were the last time that I posted. It gets better.

After satisfying Frederick's request for updated French tax info, I thought that we might be home free. Silly me. Out of the blue, more requests for documents. Statements for the past three months for our Belgian account. Proof that we had paid off the mortgage on our current house. And how about the deed to the new house? You know, the one that the mortgage is for. Let's take them one at a time.

BELGIAN ACCOUNT

We don't have any accounts in Belgium. Frederick said that we did, that we had received transfers of money from an account in Belgium. I asked Frederick for the dates and amounts. And thus the puzzle was solved. The dates and amounts were dates and amounts that I had used Wise (formerly Transferwise) to move money from our American checking account to our French account. Apparently, Wise has an office in Belgium that handles such transfers. I've explained to Frederick. Frederick understands. Never mind.

PROOF OF PAID OFF MORTGAGE ON OUR OLD HOUSE

We won’t pay off the mortgage on our old house until we close the sale. Mid February. Frederick knew that. The loan cannot be finalized until after the old mortgage is paid in full, he said. He could have told us that two months ago. He didn’t. Oversight? Who knows? But the fact is that Frederick never once in three months said that receipt of the loan could not be accomplished before the closing on the old house. Well, now we know. Pressure off. We’ll just have to wait.

PROOF OF OWNERSHIP OF THE NEW HOUSE

We’re still waiting for our copy of the deed to the new house. It’s been over a month since we closed and received the keys. But given that we’re waiting until mid February anyway, I don’t have jump on the notaire to send it over quickly. She said that it would take a month to finalize. It’s been a couple of weeks more than that. Gentle prodding should produce results.

AND THERE’S MORE

The home office has decided that because of our age, the loan will have to be for seven years instead of ten and the insurance will have to be at 100% instead of 50% of the loan should either of us ‘disappear’. (Apparently, that’s the polite term that bankers in France use for kicking the bucket.) Obviously, that means that the monthly payments will be higher. Not out of sight, not more than we can handle, but a significant percentage increase all the same. Shorter term. Better insurance. But this is the third time that the details have been modified. 

For the first time, I let my frustration show to Frederick. Just a little...

So we’re not done yet. Once again, stay tuned.

STUFF TO KNOW ABOUT FRENCH MORTGAGES: #8

 

Every interaction with a French institution teaches valuable lessons. Usually, those lessons involve learning patience. The French bureaucrat/fonctionnaire has a list and loves to check the boxes. Here are a few boxes that you need to be checking.

 

You have a banker, not a bank. I don't know how it is for folks with abundant resources, but we are just average folks with an income close to the French national average. That means that there's one person at the bank that handles our account, our banker. Frederick. It's a small branch with just a few employees, so there's no hand off. Frederick works on our dossier and, if he's not around, the dossier sits. (More about that later.) Get to know your banker.

Bring every piece of paper that you own when meeting with your banker to discuss your request for a mortgage. If you have been living in France, five years worth of tax returns. French tax returns. (If you live in France, you have to file whether you have to pay French taxes or not.) Proof of residence, such as a utility bill that's less than three months old. Proof of income - required even though we've been running our income through the same bank for almost eight years. If joint request with spouse, proof that you are married. In other words, bring every piece of paper that you own.

French bankers don't negotiate like American bankers. We didn't need much of a mortgage. We initially asked for a mortgage that would cover about 40% of the purchase price of our new house. (Our 'new' house, by the way, is 1,000 years old.) Between the equity in our current house and our savings just for this purpose that I'd put aside, we could easily cover the rest and didn't want to borrow more than we needed to borrow. After much typing and chin scratching and more typing, Frederick told me that we couldn't have a mortgage. He carefully went over the reasons - our age, our income, the phase of the moon. 

After several minutes of Frederick explaining why we couldn't have the mortgage that we wanted, and seeing how genuinely sorry he appeared to be that he couldn't help us, I asked a simple question. Suppose we only asked for 30% of the purchase price instead of 40%? More typing and chin scratching and typing. Yes! That would work. An American banker would have suggested adding money to the pot at least five minutes sooner.. I only brought it up because it seemed obvious that Frederick was not going to. Don't assume that French bankers are like American bankers. They're not.

You don't actually apply for a mortgage until you've been approved. That's right. We signed nothing until our third or fourth meeting with Frederick, after we'd supplied him with every piece of paper that we owned and completed an online medical questionnaire. After about five weeks of meetings and emails, Frederick informed us that our loan had been approved and that we needed to come in and sign the papers. We were surprised to learn that the papers that we had to sign were not our acceptance of the mortgage. We were to sign the mortgage application. Why waste time signing things if you are not going to be approved? But once the management of the branch approved, it's OK to sign the application.

You are not approved until the regional office signs off. Yippee! We're approved. Well, not really. It turns out that the approval of the branch isn't the final word. The dossier has to be sent to the regional office for the final checking of the boxes. A formality, Frederick assures us. Fingers crossed because, although Frederick says that we are approved, we are not really out of the woods quite yet.

There's a waiting period. French law takes cooling off periods seriously. What is a cooling off period? When buying a property, the buyer has a ten-day window after signing the purchase agreement to back out of the deal without major penalty. In the case of a loan, you cannot except the money until the eleventh day after approval - in our case, until Montpellier approves. We didn't know that until after we signed, not that it would have made any difference. But it would have been good to know. Maybe it was in the fine print. Be that as it may, whatever the schedule that you had in mind, add the cooling off period.

Frederick got COVID! I mentioned that Frederick didn't have a buddy at the bank to keep up with his customers when Frederick was sick or went on vacation. As it turned out, the day after we provided the last document that the bank required, Frederick tested positive. (He's fine, now. Thanks for asking.) Frederick was out of the office for three weeks. While we thought that our dossier was in the mail to Montpellier, in truth it was languishing on Frederick's desk. We are now waiting for the next update from Frederick, who is back at work after his bout with COVID.

It's been about ten weeks now. There's more. Stay tuned.

SELLING OUR HOUSE IN FRANCE: TRUE STORY #1

 Transacting business in France is always an interesting undertaking. 

Don't get me wrong. I am not one of those sourpusses who has moved to France and complains that French people live there. But French people do have ways of doing things that do not often correspond to the way that I am accustomed to doing business. We are selling our home of seven years in order to finance the move to a house more suitable to our age and old bones. (Links and pics below.) We'll have fewer, more gentle stairs to climb. More room to display, store, repair, and otherwise deal with the stuff we've accumulated over those years. We're talking about multiple opportunities for cross-cultural misunderstanding. Take the case of applying to our French bank for a mortgage.

I won't go into numbers. But I walked into the meeting with the young, casually dressed banker hoping to borrow about 40% of the cost of buying the new house. (It's strange calling a house built over 1,000 years ago a 'new' house.) I documented our income through a combination of French and American tax returns. We went over the payoff of our current mortgage (with a different bank) and the net from the sale. I told him how much of our savings I was willing to contribute to the deal. And I asked that the bank finance the rest, that 40%. 

A lot of typing ensued. Understand, we were both wearing masks and Frederick was seated behind one of those clear plastic shields that they fit around office desks these days. (Future archeologists will struggle to determine the function of thousands of oddly shaped examples of wasted hydrocarbon.) I could see that Frederick was seriously crunching numbers to make things work. He finally looked up, said that he couldn't loan me the money, and scooted his chair around to my side of the desk to pinpoint on paper exactly why he could not. Long story short, basing our lending ceiling on our age and the income on our tax returns, primarily showing only Social Security income thanks to the surprisingly reasonable cost of living in France, I was asking to borrow too much.

He was a nice, earnest young man. I listened closely. I waited. Perhaps you can guess what I was waiting for. I waited for five minutes and I would have waited forever. So I asked the question.

"Suppose I put some more money into the deal. Could I borrow 30% instead of 40%?"

More typing. Smiles. Yes, that would do it.

I'm from the USofA. When two people want to do a deal and one can't quite get it done, negotiations begin. Avenues are explored. The French, not so much. They don't seem to want to make the first move. Anyway, that's done. Now I have to sell our house. I'll keep you apprised of the process. Meanwhile, here are some pics. If you know anyone looking for a lockup-and-leave in the rural south of France, send them my way. Have them bring about $150,000. I just might accept a bit less.

https://www.leboncoin.fr/ventes_immobilieres/2042201070.htm