French mortgages for company directors and the self-employed

Self-employed buyers and company directors can be considered for French mortgages. The bank needs to establish which income belongs to the borrower, how it arises and whether it can support the proposed repayments. Residence, currency, existing debt, the property and the lender's current policy also matter. A successful business does not, by itself, answer those questions.

Consider an owner who reports a modest salary, receives irregular dividends and leaves substantial profits in a company. A file containing only payslips can understate the financial picture. A summary that adds company profits to every dividend can overstate it. The useful work is to connect the accounts, remuneration records, tax return and personal receipts without counting the same value twice.

For BlueVectis clients seeking financing from €1M, that explanation is central to preparing a French purchase. Whether the target is in Paris, the Côte d'Azur or the French Alps, the credit request should make the business understandable to a lender unfamiliar with its history.

Describe the legal entity, trading activity, ownership percentage and your role. Explain who controls distributions, whether there are other shareholders and which company actually pays each income stream. A director employed by a large business, a sole trader and the owner of a private company can require very different evidence.

For a UK limited company, GOV.UK confirms that the company is legally separate from its owners. The company's turnover and assets therefore should not simply be entered as the director's personal income and savings. A bank may examine them to understand the business, but the file still needs to establish the owner's position.

Use a simple ownership chart if there are several entities. Show each company once, with the borrower's interest and the payments flowing to the borrower. If one company pays another before the individual is paid, show that intermediate step. Group turnover should not reappear as several separate sources of personal income.

Take a fictional sole shareholder of a UK company. The company pays the owner an £80,000 annual salary. Its profits below are after that salary and corporation tax. It begins 2023 with £600,000 of retained profits. There are no other shareholders, distributions or adjustments in this simplified example.

In 2025, the owner receives a £500,000 dividend. For this illustration, the supporting records explain that £260,000 follows the ordinary distribution pattern and £240,000 is a separate exceptional release of accumulated reserves. That distinction must be supported by the real records in an actual application; the label alone proves nothing.

Illustrative calendar company years, not a client case or lending offer. Retained profits are an accounting balance, not a bank balance. Gross salary differs from the amount received after payroll deductions; personal tax and UK tax-year reporting require a separate reconciliation.

The company ends 2025 with £740,000 of retained profits: £840,000 brought forward, plus £400,000 of profit, less £500,000 of dividends. The salary has already been deducted in arriving at company profit. Neither the remaining reserves nor the profit figure should be added again to the owner's £580,000 remuneration total.

Across the three years, salary plus all dividends averages about £393,333. Excluding the separately identified £240,000 exceptional payment gives about £313,333. Those are two descriptions of the same history, with different assumptions. Neither is automatically the income a French bank will accept, and neither should be presented as net income ready for an affordability calculation.

The HCSF FAQ distinguishes stable, recurring income from exceptional receipts. It also cautions that dividends still to be received depend on future company results. For a mortgage within that framework, an expected distribution is not enough merely because the owner intends to vote it. Present the history and its supporting evidence, then establish the lender's treatment.

Averages can conceal a recent decline as easily as they can smooth an exceptional year. Explain what happened in each period and show current trading. The credit team should be able to see whether the business now supports the remuneration being proposed.

Retained profits help explain what the company has earned and retained. They do not establish how much cash is available today, how much the borrower may withdraw or what personal income the bank will recognise. Ask the accountant to distinguish available profits, cash, money owed by customers and funds needed to run the business.

GOV.UK explains that dividends must be supported by available profits and properly declared and recorded. A UK dividend voucher provides evidence of the payment's nature. It does not establish that the same amount can be paid every year, or that a French lender must include it in full.

Also identify transfers through the director's loan account. Repayment of money previously lent to the company returns capital to the owner; a loan from the company creates a different position. Neither should be casually described as salary or dividends because cash reached a personal account. Supply the account movements, balance and relevant terms, with the accountant's explanation.

Ask the proposed lender to confirm the required periods and format. Preparing the last three completed years, where available, plus current trading information is a useful starting point for discussion. It is not a claim that every bank requires exactly three years or accepts a simple three-year average.

HMRC explains how to obtain an SA302 tax calculation and a tax year overview. Match the documents to the correct period: a UK personal tax year runs from 6 April to 5 April, while company accounts may use another year-end. A dividend paid after the company year-end can appear in a different personal tax period without indicating an error.

The table is a preparation aid, not an exhaustive lender checklist. The correct US forms depend on the entity and tax treatment. Confirm translation and certification requirements before commissioning them.

With a short trading history, explain what can actually be evidenced: previous work in the same activity, completed contracts, current clients, costs and cash collection. Forecasts should remain forecasts. A large unsigned pipeline cannot be treated as income already earned, and an accountant's projection is not a bank commitment.

For an established business, explain a material change before the lender finds it. Examples include losing a major client, acquiring another company, taking on substantial debt or reducing your working role. Current management accounts help bridge the gap after the last filed year. Identify who prepared them and whether they are provisional.

A business sale creates a different mortgage question. Separate cash already received, amounts retained or deferred, possible earn-outs and the income that continues after the sale. The old business's salary and dividends may no longer describe the borrower's future position. Supply the sale documents and have tax advisers establish the amount genuinely available for the purchase.

The central HCSF framework for covered French home loans uses a 35% debt-service limit and a 25-year maximum term, with defined exceptions and limited lender flexibility. A borrower cannot demand that flexibility. The assessment also depends on the income and borrowing costs included, rather than a multiple of company turnover.

The HCSF FAQ uses net income before income tax and includes required borrower insurance in borrowing costs. Agree how foreign remuneration is reconciled to the relevant definition. The gross salary-and-dividend totals in the earlier example are deliberately not an approved affordability base.

List personal mortgages, loans and other commitments, together with business guarantees and potential obligations that need separate assessment. If both applicants draw income from the same company, say so: two recipients do not create two independent businesses. Also show how euro repayments will be funded from sterling or dollar receipts and what cash is available between distributions.

Identify where the personal contribution will come from and when it will be available. Existing personal savings, a planned company distribution and the proceeds of a business sale require different evidence. A proposed withdrawal should be reviewed with the accountant before it is relied on in the purchase budget.

Consider the position after the withdrawal as well as before it. If extracting the contribution leaves the business unable to meet tax, payroll or operating needs, it can undermine the same income used to support the mortgage. Keep the purchase cash, business working capital and household reserve visible as separate amounts.

An exceptional distribution might provide purchase funds without constituting recurring repayment income. Document those two roles clearly. Similarly, investments offered as additional security may be unavailable for the deposit or ordinary spending. The financing plan must show which assets are committed and which remain accessible.

A useful explanation resolves specific differences. It might reconcile an account year to a tax year, explain a large dividend, identify a loan-account repayment or show how reported profit became cash. Ask for a dated explanation referring to the underlying records, with provisional figures clearly identified.

The aim is to let the lender follow each material number to its source. An assurance that the business is successful is less useful than an explanation of a £240,000 exceptional payment and its effect on the remaining reserves. The accountant explains the records; the bank decides what supports its credit assessment.

• State the entities, ownership and relevant accounting periods.
• Reconcile remuneration, tax reporting and personal receipts, including deductions and timing differences.
• Identify exceptional items and changes since the latest completed accounts.
• Explain distribution availability, business commitments and contribution funding.
• Provide references to the documents supporting each conclusion.

Once the income is understood, assess the suitable lending route. A conventional mortgage may fit a well-evidenced recurring-income case. A private-bank proposal may involve investments, pledged assets and a separate repayment plan. Compare the whole commitment; a different product label does not remove applicable credit requirements.

If an earlier bank declined, review the actual reason and what the revised evidence changes. A missing reconciliation can sometimes be supplied. A bank's policy restriction, insufficient accepted income or a property problem requires a different response. Better presentation helps the bank assess the facts; it does not guarantee a different decision.

For financing from €1M, send BlueVectis the target purchase, desired borrowing, ownership summary, available accounts and personal income evidence. A senior partner can identify the questions to resolve with your accountant before presenting the request to suitable lenders. The objective is a coherent application that remains consistent from first assessment through completion.