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Mortgage, insurance and tax solutions for France

How to assess the total cost of borrowing of a French mortgage loan

Non-residents taking out a French mortgage have never had it so good. With average long term fixed rates well below 3%, French mortgage rates haven’t been that low since the 1940’s…
Extremely low rates should not however overshadow that other elements also contribute to the total cost of borrowing with a French mortgage.

The total cost of borrowing is the sum of the fees and monthly instalments that will be repaid over the contractual life of the French mortgage loan. Amongst other, it includes application fees and the cost of the mandatory life insurance premiums.
Interests paid on the outstanding capital account for the largest part of the total borrowing cost. The Annual Interest Rate (AIR) is the main driver behind interest calculation. In France, mortgage interest rates are typically linked with the duration of the mortgage loan. At an identical LTV, the interest of a 10 year French mortgage will be lower than a 15 year mortgage.
Insurance premiums account for about 20% of total borrowing costs. French lenders normally require that A life and payment protection insurance is in place before funds are disbursed. It is worth shopping around and comparing pricing and products as significant savings can be achieved.
Application and admin fees typically represent 1% of the French mortgage loan amount and are capped at around €1500.

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