Different Types of French Mortgages Available
We at Sextant offer mortgages with a large panel of French Banks. Listed below are the most frequently offered loans available to Non-Resident Purchasers.
These are by definition self explanatory, the interest rate is fixed at the start date of the loan for the duration of the mortgage period be this 5 or 25 years. The benefit is the knowledge that you will always know what your monthly expenditure on your French Mortgage will be. The downside to this type of mortgage is that the interest rates are 1; higher than can be obtained in the same market place by a variable rate loan and 2; they carry a penalty payment of usually 3 % of the capital re-imbursed although we have noticed recently that certain banks are now charging 4% should you choose to pay of your loan in all or part before the end of the loan period.
These loans can be obtained at a cheaper rate of interest than the Fixed rate schemes mentioned above and can usually be cleared in all or part before the end of the loan period without any penalty. Please note that some variable rate loans in France do carry early redemption penalties. We do not recommend these types of loan with penalties for our clients at Sextant Mortgages. Within this same type of category of loan we can arrange Capped rate mortgages where the amount the interest rate can move up or down is capped at either a 1% or 2% Margin giving some stability to payments.
These types of loans are designed to give the client the best of both worlds so to speak. Your monthly payment is fixed at the outset of your loan although the interest rate is variable. Should the interest rate move up or down, the bank will either increase or decrease the term of your mortgage instead of changing your monthly payment. As the interest rate is cheaper than a true fixed rate scheme and there is no penalty on early redemption in part or all this type of scheme is becoming increasingly popular. We will be happy to advise clients on this type of scheme.
This type of loan is not widely available in France but there are certain French banks that are happy to transact this type of loan. The loan offered may well be a type of hybrid arrangement where the interest only period may well be limited to the initial 5 years followed by a capital and interest period of 20 years on a standard 25 year mortgage. Or even 10 years Interest only followed by 15 years capital and interest repayment. Sextant Mortgages can arrange true interest only products whereby you only ever pay the interest and at the end of the mortgage period either then repay the capital sum initially borrowed or sell the property to repay the loan. We can arrange these loans at Sextant Mortgages with no penalties on early repayment should you wish to pay off the capital at any given point in the mortgage term.
We are able transact French equity release mortgages for any purpose with a number of French banks up to 80% of the value of the property. Please contact us for more details on these types of mortgage. We can combine this with interest only for those clients who qualify. Here are some rates available for French Equity Release Mortgages.
The first thing that should be explained is not confuse this type of mortgage with the term Buy to Let as in France this does not have the same meaning. If you simply wish to let out your French property from time to time to suit your own requirements this is not a Leaseback scheme in France. A true Leaseback scheme in France or “Credit Bail” to give it the correct French name is a development of properties in a complex the letting out of which is managed by a professional management company set up to manage the whole complex at the time it is built. The properties are usually let out over a 9 year period with a limit of how much time the owner may use the property for his own use typically no more than 4 weeks a year. The rental income is usually guaranteed for the 9 years period at the out set at for example 4.5% of the value of the property purchased. Those clients who wish to be advised on these types of scheme please contact us and we will be happy to help and arrange the necessary French mortgage which can be on the basis of any of the schemes mentioned above. Here are some rates available for French Leaseback Mortgages.
These types of schemes can be arranged for clients who may well have an unencumbered property in France whilst paying a mortgage on their own property at home at a more expensive rate of interest than they could obtain in France. We can arrange a loan against the French property providing funds to repay the more expensive loan and reduce your monthly outgoings. Please feel free to contact us for further details.
We have tried to cover the main types of French property loan that we can arrange for clients when buy property in France, but please bear in mind this list is not exhaustive. Should you wish to arrange Bridging Loans in France, or French Land Purchase Loans to buy and build your own home we will be happy to help. Don’t hesitate to contact us regardless of your project and we will be happy to talk it through with you without any commitment on your part.