Assurance dommages-ouvrage – Insurance against Damage on Property
This is an insurance that covers a new property against structural fault or defects for a period of 10 years following the end of its construction. It must also include a liability insurance subscribed by the architect, the contractor, and the developer.
Apport personnel – Down-Payment
The down-payment is the difference between the purchase price, including Estate Agent's fees, and the loan amount, either expressed in Euros or as a percentage of the purchase price. Lenders requirements are always expressed in terms of Loan-To-Value or LTV.
Assurance en couverture de prêt - Borrower’s Term Life Insurance
The Borrower’s Term Life Insurance is a term life insurance tied up to a loan and written for its term. It requires the policy holder to pay only for the cost of protection against death and for the amount borrowed. Unlike whole life insurance there is no cash value built up.
Amortissement - Amortization – Repayment
The repayment refers to the reduction of debt by periodical payments of interest and principal to pay off a loan by maturity.
Acte Authentique – Formal Deed of Sale
The notary must ensure that all the legal work requirements are complete. The mortgage to finance the purchase must be granted. Moreover, the grant of the term life insurance and the property have to be insured, before the deed of sale is finally signed.
Acte de prêt - Mortgage Deed
In order to complete the operation, all mortgages are registered at the Mortgage Registry which is managed by the French Inland Revenue. This guarantees the buyer that the title is free and clear of any hindrance. The registration fee will be paid by the borrower.
Acte sous-seing privé – Private Deed
The private deed is a private deal between parties. It is a binding contract though not handled by a public officer.
Assurance Multirisques Habitation – Home Insurance
A French home insurance not only covers the building and its contents, but also includes a liability insurance that covers the household. You will be required by your notary to provide a copy of your home insurance policy on completion.
Compte bloqué- Escrow
The borrower’s deposit is held either by the estate agent (if authorised) or a notary public until completion. This amount will be deducted from the total cost to calculate the outstanding amount due by the buyer on completion.
Commission d’Agence – Realtor/Estate Agent’s Fee/Commission
Fee paid to the estate agent for taking care of the sale of a property. It is a percentage of the selling price of the property. Most lenders consider that it is part of the purchase price and take it into account when calculating the Loan-To-Value.
Contrat de construction - Construction Contract
This is the type of contract you have to sign when you have a house built. The deposit required as guarantee is 5% of the total costs. There is a 7 day cooling-off period before the contract becomes binding.
Contrat de reservation - Reservation Contract
This is the type of contract you have to sign when you buy an 'off plan' property, i.e. the building does not exist yet or it is under construction. The deposit required as guarantee is 5% of the total costs. There is a 7 day cooling-off period before the contract becomes binding.
Capacité d’Emprunt/Capacité d’Endettement-Borrowing Capacity/Credit-worthiness/Affordability
This refers to the borrower's maximum commitment to repay a loan using an 'income rule' and a 'debt rule'. As centralised credit ratings do not exist in France, lenders need to do a formal evaluation of the borrower's current income and outgoing to calculate his/her debt to income. This includes going through proof of income and tax returns but also bank, credit cards, loan, mortgage statements and regular outgoing (including rent paid). This allows the lender to calculate the borrower's exact borrowing capacity, i.e. the maximum loan amount a borrower can afford according to his/her credit worthiness expressed as a percentage of the borrower’s income minus existing outgoing.
Commission d’engagement - Mortgage Commitment Fee
The mortgage commitment fee is charged by the lender in order to hold the credit available in case of stage payments/disbursement of funds (construction, off plan or renovation loans).
Chèque de Banque - Certified Cheque
In order to complete the operation, the buyer will be required by the notary to pay by certified cheque the difference between the purchase price (including fees, taxes and stamp duty but minus deposit) and the amount borrowed and for which the buyer’s bank guarantees payment. Funding the loan is the final conclusion of the process of getting a loan.This is when GE Money Bank sends a certified cheque to the notary in order to complete both the purchase and the mortgage
Caution /Caution Personnelle et Solidaire - Guarantor
The guarantor can be either an individual or a company acting as security for a borrower. A guarantor takes the responsibility for repayment or payment of the loan in case the borrower defaults. This type of security is a potential contingent liability of the guarantor.
Dépôt de garantie - Deposit
This is the initial sum of money (usually 10% of the purchase price) a buyer needs to put down as an evidence of his/her intention to buy the property and to protect the seller in case the contract is not completed.
Demande de prêt - Loan Application
The loan application form is sent to a borrower that requires information on all aspects of a borrower’s credit history. The borrower will find the list of documents required to have his/her file studied.
Délai de Reflexion - Cooling-off Period
A cooling-off period is required by law. During this period a property buyer or a borrower is prohibited from accepting and signing a contract. The 7 day cooling-off period is 7 days for a preliminary purchase contract (cf. Loi SRU). It is a 10 day cooling-off period for all mortgage offers from the day the borrower receives the loan offer (cf. Loi Scrivener).
Déchéance du terme - Foreclosure
Foreclosure is a process by which a homeowner, who has not made timely payments of principal and interest on a mortgage, loses the title on his property. The lender can then go to court, to repossess the property, which may be sold to satisfy the claims of the mortgage.
Défaut de paiement - Default
Default is a failure of a borrower to make timely payments of interest and principal as they come due. In case of default, the lender may make claims against the assets of the borrower in order to recover the principal.
Franchise partielle – Partial Exemption
There is a partial exemption when repayment of capital is deferred for a specific duration to reduce monthly instalments. During this period, only the interest is due by the borrower. This is stated within the contract.
FICP / FCC – Banque De France black lists (current accounts and loans)
Assigning credit ratings to existing and potential customers is not legal in France. There is no formal organized evaluation of an individual's credit history and payment capacity. It is not possible for banks and lenders to investigate, compile and maintain records on the credit worthiness of customers. The only records available in France to banks and lenders are 2 black lists (one for current accounts, the other one for loans) maintained by the Banque De France which only lists customers with serious issues with a bank or lender (unauthorized overdrafts, personal bankruptcy, litigation, arrears, foreclosure etc.). The customer's name is removed once the issue is cleared. No record of this issue is kept whatsoever after it has been cleared.
Frais de dossier - Administration Fee - Loan Arrangement Fee – Bank Fee
The administration fee is due by the borrower to the lender right after completion for arranging the mortgage. This fee must be included in the APR, expressed as a percentage.
Franchise partielle – Partial Exemption
There is a partial exemption when repayment of capital is deferred for a specific duration to reduce monthly instalments. During this period, only the interest is due by the borrower. This is stated within the contract
Offre d’Achat - Offer of Purchase
As a property buyer, you have to make a formal offer at the asking price or at the price you want to offer. If this offer is made at the asking price, it can not be turned down by the seller (unless another buyer has already made a better previous offer).
Offre de prêt – Loan Offer
The loan offer is regulated by the Consumer Act. It is a written document sent by mail by the lender to the borrower listing all the terms and conditions of the loan including the APR, the type of charge or security used and a repayment schedule. A compulsory 10 day-cooling off period offer starts from the day the loan offer is received by the borrower. Conditions must be maintained by the lender for a period of 30 days starting the same day.
Permis de construire – Planning Permission
The Planning Permission is agreed on and issued by the local Mayor’s Office.
Promesse/Compromis de Vente - Agreement to Sell/Pre-contract
The pre-contract is a provisional preliminary contract used for the purchase of an existing property or a building ground. This document lists names and addresses of both seller and buyer, a description of the property, its surface area, registration number and purchase price. There is a 7 day cooling-off period before parties are bound. The buyer will then be asked to pay a deposit held into escrow, usually 10% of the purchase price. The contract then becomes binding. This agreement to sell may be subject to conditions and contingency clauses (e.g. subject to obtaining a mortgage), including the possibility for the buyer to pull out if any of those clauses is not met. If this happens, the agreement will be declared null and void with all deposit refund immediately.
Prêt amortissable - Repayment Loan
The repayment loan offers monthly instalments composed of a fraction of the debt capital, interest payments, and future insurance premiums
Prêt in fine – Interest-Only Loan
An interest-only loan is a loan in which the borrower pays only the interest, which means that monthly instalments are made of interest and there is no monthly repayment towards principal. The outstanding principal is paid on maturity or at the end of the Interest-Only period.
Pénalité de remboursement anticipé – Prepayment Penalty
The prepayment penalty is a fee paid by a borrower to a lender when a loan or mortgage that does not have a prepayment clause is repaid before its scheduled maturity.
Privilège de Prêteur de Deniers – Borrower’s security
Same type of charge on a property as an ‘hypothèque’ but only used for the purchase of an existing property when this property is used as security for a loan (i.e. it can not be used for construction, ‘off plan’, renovation and refinance).
Plues Values - Capital Gains
Capital gains refer to the difference between a property purchase price and selling price when this difference is positive.
Prélèvement automatique - Direct Debit
Amount that is directly debited on your account to pay your instalment for example.
