Page 0020

must be provided at the time you apply

for the French mortgage. The funds will

be paid directly to the contractors once

the work has been completed. Be careful:

the quotes must be accurate. The final

costs cannot vary significantly from the

quoted costs.

A FRENCH MORTGAGE?

Borrowing money against a property

you already own in France is much less

common than in the US, UK or other

home markets. It is also more expensive

in terms of fees.

In France, the most straightforward

and cost-effective time to secure finance

against a second home is at the time of

purchase. It is therefore critical to give

some thought as to whether you want

a French mortgage secured against the

property. If you decide you do, make sure

you pick the right mortgage product.

A good French mortgage broker will

save you money by selecting the most

suitable French mortgage product. In

many cases they offer discounted rates

and fees - which are not available when

you approach the banks directly.

20

Securing finance for the purchase of

your property in France is an

important part of the process.

You may need it for affordability

reasons, to increase your budget, or

simply for financial and tax planning

purposes. Let's take a look at some

elements you should consider

WORDS: SIMON SMALLWOOD | PHOTOS: SHUTTERSTOCK

W

hen securing a

mortgage against your

property in France (as

opposed to raising

money against your

primary residence), two main options

are open to you. The first is to take out

a mortgage with a domestic retail bank

in France. These lenders can provide

French mortgages, on a standalone basis,

across a wide range of budgets. They are

secured against properties in all locations

throughout France. The downside of this

option is that French retail lenders have

strict criteria in terms of assessing

affordability and in deciding who they

lend to. They have little flexibility or

interest in deviating from these rules.

The second option is to arrange a

facility via a private bank. This is only

available for high value properties and

loan facilities of €1 million or above.

These institutions can be based in

France or in offshore centres such as The

Channel Islands, Monaco, Geneva and

Luxembourg. The drawback with these

options is that you'll need to develop

a wider banking relationship with the

lender. This means making additional

investments with them, as they will not

provide a mortgage/finance facility on

a standalone basis. The advantages

are firstly that private banks are more

flexible than the retail lenders in terms of

their criteria. Secondly, the interest rates

you pay are currently very low - around

2% on an interest-only basis.

TYPES OF MORTGAGE

French mortgages to finance the purchase of

a property are widely available

from many French banks. The most prevalent products

are capital and repayment

mortgages over terms of up to 25 years.

Variable rate mortgages are fairly common. Although you

are not protected if

interest rates rise, they have few - if any

- penalties for repaying the loan early.

Long term fixed rates are very popular

in France, and 10-, 15- or 20-year fixed

rates are available. Interest-only mortgages

are less common, though some

options are available if you can prove

you have the assets/savings to repay the

capital sum.

Private banks typically offer interest-only

facilities over a five-year period.

These facilities may be renewed, so you

should maintain your relationship with

the facility provider. For an idea of the

latest rates, you can view our French

mortgage 'best buy' tables at

www.internationalprivatefinance.com.

Mortgages for purchase-and-renovation, as well

as pure-renovation, are available.

However, the French lenders require

the work to be carried out by registered

French builders. All quotes for the work

Intelligent

FINleggett@internationalprivatefinance.comNE

For further information telephone

+44 (0)207 484 4642 or email

Leggett@internationalprivatefinance.com

or visit the website

www.internationalprivatefinance.com

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