One obligation that you will need to fulfil when taking out a mortgage in France concerns life insurance. French lenders systematically require mortgage borrowers to be covered for 100% of the French loan amount. The process of setting up this life insurance therefore tends to take place in parallel to the mortgage application itself, as banks are unable to issue a final mortgage offer without proof that a satisfactory policy has been take out.
The majority of lenders have a relationship with a partner insurance company, with whom they will prefer to arrange the cover. Nevertheless, some of you may have existing policies to the value of the mortgage, in which case taking out another policy may represent an unnecessary expenditure. Under these circumstances some lenders are happy for you to provide proof of an external policy, even one from another country, to show that the life cover is in place.
The process of setting up life insurance differs, depending on the size of the mortgage and the profile of the borrower. Providing the mortgage amount is below approximately €300,000, and the borrower suffers from no significant health issues, the process should consist of no more than completing a simple application form and health questionnaire. However, those over the age of 70 years, with underlying health concerns or looking to take out a large mortgage should expect to be obliged to undergo medical tests as part of the life insurance procedure.
For joint mortgage applications, the total of 100% cover can be shared between two borrowers. French banks will ask that this be split in accordance with each borrower’s income; that is to say, the borrower who earns the majority of the income in support of a mortgage application will also be required to have the majority of the life cover against his or her name. The bank will confirm the required split as part of the mortgage application process.