Amount of income required for a housing loan


(Chloe Grice) #1

Does anyone have any idea of the amount of income we would be expected to have in order to be eligible for a housing loan please? Even a ball-park figure would be helpful.

We have found a house we really want to buy which is on the market for 65,000 euros without agency fees but when we approached MAIF to ask if they would negotiate a deal for us, they said it was impossible. Our gross income is around 20,000 and we have four kids aged 3-9. We also have a plot of land we should be able to sell for around 30,000.

Any advice would be helpful, thank you so much.

(Anna Watson) #2

The rule of thumb is that loan repayments (ie the mortgage you are asking for, on top of any other loans you may currently be paying off ) can’t exceed one third of total net income. I’m not aware that they take family composition into account, but a household income of 20k for a family of 6 sounds a pretty tight budget to me.

Wouldn’t you be better renting, aren’t you eligible for housing benefit? Owner occupiers are excluded from a lot of benefits that tenants are entitled to.

(Chloe Grice) #3

Hi Anna, thanks for your reply. We are currently renting but we don’t receive any benefits apart from family allowance, so it wouldn’t make any difference really. The house we are currently living in is on the market, which is why we need to move. My husband is a builder and working on our own property is something we have both have wanted to do for a long time.

I’m surprised that we’ve been refused because we thought we’d easily be able to repay the loan within 25 years. The family allowance we receive is not included in the 20,000 by the way, because the banks don’t recognise it as part of our income even if we do! And we don’t have any other debts.

The reason I mention the kids is because the second time MAIF requested more info, they specifically wanted to know how many there were and their ages: I suspect part of the formula may be whether we are able to put money aside for their future.

It seems such a small amount of money for a home, I’m just disappointed more than anything!

(Anna Watson) #4

Have you tried your own bank? (I don’t know what MAIF is, is it in fact a bank?)
Worth trying various lenders, they each have their own criteria, although I believe the 30% restriction is a legal obligation set by the government to prevent surendettement and no lender can legally give you a loan that would bring your repayments above that level. But often your best chance is with an institution that you are already a client of.

It does also depend a bit on the property you want to purchase. There is a big drive to encourage people to buy energy efficient homes so you tend to get better interest rates on modern/properly renovated properties, hence you can borrow more because the repayments are lower. But that doesn’t usually crop up at the initial meeting, usually they start by deciding whether to approve your application “on principle”, then once you find a property they look more closely and that’s when they offer you a loan or not.

Best of luck, persistence and determination often pays off.

(Andrew Hearne) #5

The 30% of disposable income (having taken out all other commitments is a legal requirement as Anna says and avoids all the mess the UK often has (and I believe the UK has tightened up on what you can borrow now) Try mainstream banks, as Anna says, the MAIF are great for insurance but I’d stick with a bank or courtier for a mortgage. Our last house sale fell through due to a very well paid haut fonctionnaire not being able to borrow enough, at the time UK banks would have offered double what French ones could but that’s academic!

It’s still a very good time to borrow/buy so bonne chance :wink:

(Chloe Grice) #6

As I understood it, MAIF undergo a search on your behalf to find the bank that will suit your borrowing needs: they were recommended to me by a French friend. And we tried our bank (Credit Agricole) when we wanted to buy the house we are in now for 100,000 - they just told us to try again in 6 months’ time.

Like I say, it just seems so frustrating when we know we can easily make the repayments, and the amount we need to borrow is so small really.

Thank you both for your replies, we’ll just have to go back to our bank in a few months’ time with better figures! Have a lovely day.

(Mark Robbins) #7

A few years ago we had a british couple stay in a gite for 6 months, looking for a property to buy, and eventually buying somewhere to live in permanently . They didn’t want to use their “capital” from selling their UK house, so applied for a mortgage (60k ish, through CA). Unbelievably, they got it, based on their last 2 years books from their closed down UK business.

(Anna Watson) #8

And you could squirrel money away in the meanwhile. Just maybe if you have a good relationship with your bank manager, and if next time you see him he can see that you’ve been consistently putting aside an amount equivalent to the potential mortgage payment into a savings account each month, that may influence him in your favour.

(Trevor Hunton) #9

Go and have a chat with your bank. Sixty grand over fifteen years fixed at current rates should cost you around 350€ a month plus around 35€ a month for life insurance. Been there done it, banks here are quite flexible regarding loans, they will manipulate the figures if they can to comply with the law. They are currently awash with money and very keen to lend.

(Glenn Beavis) #10

Just to add a couple of euro’s worth to supplement the existing. I contacted someone about loan/mortgage recently.
Without copying pasting oodles… roughly yes, they use a figure of a 1/3 combined gross income.
Less any loans, current mortgages or rental.

So of 3k a month gross income, you can use 1k towards a mortgage - less any loans etc…

found this…it may help…

How much can you borrow in France? To calculate how much you can very approximately borrow in Euros:-
Take your gross (joint) monthly earnings £/ Take 33% of this amount £/ Deduct any monthly mortgage or rent you pay £/ (You also need to add on all loan payments) £/____________ This figure is the approx. amount you can repay per month on a French Mortgage. £/ To calculate how much this is in Euros divide by the current £/ exchange rate Euro________ Quotes also involve many other factors including your age, your number of dependents, your employment type, your country of residence and citizenship will apply.

(Chloe Grice) #11

Thanks for the info @Glenn. It’s interesting to know that those are factors that are taken into account: that’s why they aren’t able to say you need to be earning ‘x’ amount for us to reconsider.

All we can do is just keep trying, I guess! Maybe our persistence will pay off; it seems to be the only way to get anything done here.

@Trevor, that was how we were looking at the sums: it made complete sense to us on paper. I wonder if there are banks who are more likely to favour us? We’re with Credit Agricole, but I’d be happy to move our account if necessary. Living in a house that the owner really needs to sell is a little stressful!

@Anna Although we wouldn’t be able to put aside money for a potential mortgage as well as paying our current rent, it’s good advice to keep our account looking healthy at least!

(stella wood) #12

Hi Chloe… has you landlord offered you the possibility of buying the house you are renting…???

(Chloe Grice) #13

Well, we rent it from my MIL, who lives in the UK: and yes, one of our many plans was to do exactly that, but it’s on the market for 100,000. That was the figure that our bank originally refused us back in the spring, telling us to try again in six months. But the fact that MAIF have now rejected us for 65,000 makes me feel gloomy that it will still not be a good response from CA. My MIL is pretty desperate to sell and to be honest, I really want us to feel a little more secure. We’ve had so many ups and downs since we moved here that it would just be nice to be able to relax and get on with things, even if it means lots of building work and renovation - at the moment it all feels in limbo :frowning:

(Ann Coe) #14

Hello Chloe
Just a thought but have you tried one of the on-line banks? I bank with Boursorama, excellent service, and they are falling over themselves to offer loans at the moment. They have an on-line simulator that you can use to see if you qualify. Another little thought, have you tried asking about renting housing from your commune ? HLM’s are often very good value and it might be that you qualify for aid with rental tool. I know someone who is renting a lovely appartment for 150 per month services included. Worth a try ! Good luck.

(Chloe Grice) #15

Hi Ann,
A friend of mine did suggest an HLM to me a while back and I know some of the places are quite nice, but my hubs is a builder with lots of kit including a mini-digger, so it’s tricky to find a place with enough space for it and and all of us! That’s why it’s so frustrating that we’ve been turned down: we feel like we’ve found a property that’s both affordable and fits our needs perfectly AND it’s free of agency fees!

I hadn’t thought of online banking - do you know if you need to open an account to be able to use the simulator? I had a look at their website but couldn’t see anything about loans. If you can post a link to the simulator I’d be very grateful! Thank you :slight_smile:

(Ann Coe) #16

Hello Chloe

Here is the link for the simulator, I am a big fan of Boursorama and on line banking is so easy, it’s free, plus there are good security checks you can have with your account. One instance is when I use my card above a certain amount they send me an sms to tell me. That way if it’s a fraudelent use I can let them know straight away.

Regarding HLM’s do ask at your local Mairie and nearby ones too, you don’t have to be resident in a commune to ask if they have properties to rent. The person I mentioned lived 300kms away from the commune she is now resident in. For me the first stop is always the Mairie, explain your situation, they are usually very helpful. They may also be able to suggest a place you can leave your mini digger. Well worth the try !

(Chloe Grice) #17

Brilliant thank you Ann! I managed to get a reasonable quote - better than Credit Agricole - which is exciting, although ironically, Boursorama only consider loan requests over 100,000… I’ll definitely give them a go as soon as our figures are looking a bit stronger. Thanks so much for your help!

(Glenn Beavis) #18

Hi Chloe,

If you feel like not having eggs all in one whatsit… give these a try … and if you wish, they will send a couple of docs to you , You never know…especially as some only like to give mortgages above a certain ammount, but then say you don’t qualify to be lent that much…frustrating.
But whichever…good luck and let us know how you get on.

(Trevor Hunton) #19

Another option is buy to let, usually 100% loan, no problem if projected rent covers 70% of the cost of repayments, then move in, tell the bank every year its not quite ready to rent out yet.

(stella wood) #20

It’s dodgy enough trying to flannel a Bank in a language/culture you are familiar with …(and I would not recommend it anyway).

…but, it is certainly NOT worth trying to do that in France…