Hi,

Hoping you can help.

I'm about to purchase a property for 150,000 euros and have secured finance for 80% so 120,000 euros

The lender has instructed a valuation - can you tell me what the criteria is for their valuation, what are they looking for?

Also, is the finance from the french bank based on loan to value or loan to purchase price?

Once the valuation has been agreed, say for example 150,000 is the seller then allowed to for example lower the sale price on the compromis?

Finally, is it the notaire that requests the borrowed funds from the lender?

Thanks in advance!

S

Hello Simon

The French banks only ask for a vaulation - it is nothing more than that.
They are looking to see that the property is suitable and acceptable to them, and what you are paying for the property and the amount they are lending is fair. They are also looking to see that the property is 'habitable'.

The mortgage finance is based on the valuation of the property.

It is usual to establish the purchase price with the vendor (the person selling the property) at the time of making your offer.

The Compromis de vente is a legal contract and states full details about you and the vendor, the property, the purchase price, whether you are applying for mortgage finance, suspensive clauses (those are get out clauses), and the date of completion, etc, etc.

Obviously if there is something wrong with the property and/or it does not meet valuation, the bank will not offer the amount of mortgage finance you had applied for.

If you have the correct suspensive clause written in the Compromis, you can either walk away from the purchase without the loss of your reservation deposit, or re-negotiate the price with the vendor, in wihch case the Compromis will have to be altered and that may incur some extra cost.

And finally .... it is up to you to instruct your notaire to ask the bank for the mortgage finance cheque. Your notaire should ask for the funds at least a week before you complete on the purchase of the property.

I hope that helps you.

Carole Bayliss
mortgagefrance

Hello Carole,

Thank you for replying.

Can you just claify - if the seller were to now lower the sale price would this affect my borrowing amount, even if the valuation was agreed at 150,000?

I only ask as he may try and ask me for more cash, but I'd still need my finance to stay the same.

Hope this makes sense?

Thanks

Hi Simon

Oh dear ... I think I'm understanding the situation ...... please correct me if I am wrong.

The vendor wants to reduce the stated purchase price, but wants you to provide the difference (or more) in cash. If so .... It is illegal.

When I wrote " mortgage finance is based on the valuation of the property "
I should have added whichever is the lower amount of the valuation or the purchase price. My apologies - I did not forsee your next question.

Whatever the Compromis de vente states as the purchase price is what the bank will use to establish their 80% mortgage. The valuation of the property follows next.

If the property is down-valued they will only advance 80% of the valuation. If the property is valued higher than the purchase price (that doesn't usually happen) the bank will only lend 80% of the purchase price.

Carole Bayliss
mortgagefrance

if a mortgage evaluation is based on the property itself - the lenders amount is decided by the value of the property itself. i suppose not by request

It there any good uk based mortgage brokers gor france?

There are even good English brokers in France.....

Kind Regards
Carole Bayliss
mortgagefrance.com