Why take a French Mortgage?
If you are considering purchasing a property in France, you will need to know how a French mortgage works. Many people who have experience with mortgages are surprised to find that the French banking system is quite a bit different than those in their home countries.
So before you even consider applying for a French mortgage, here are just a few of the things that you should know.
To start, a French mortgage has a maximum duration of twenty-five years and the security is only taken out on the property. As in most countries, personal income and net worth are the most important factors when applying for a mortgage, as is your credit score. The average percent borrowed is between 70% and 85% of the purchase price. And while all nationalities are welcome to apply for a mortgage in France, the interest fees and amount borrowed may be capped differently from actual citizens.
If you are looking to purchase commercial real estate and need a mortgage, you should know that companies must be registered in France to even apply for a mortgage.
So, with all these restrictions and regulations, why would a foreigner take out a mortgage in France? After all, you can simply transfer a mortgage from your home country. But the fact is that French mortgages offer homeowners a number of attractive benefits.
The main reason many non-residents choose to obtain a French mortgage is because of inheritance taxes, which are incredibly high in France at over a quarter of the property value. However, if you have a mortgage through a French bank, you will save a good deal of money on these taxes.
Other good reasons for choosing a Euro French mortgage:
1. French interest rates consistently lower than sterling & dollar rates.
2. Keep your high yielding saving and investments and borrow at low interest euro rates.
3. Preserve equity on your main home by financing your French property in France .
4. Reduce risk by matching euro assets with euro liabilities.
5. Gain from the high level of French consumer credit protection.
6. Deduct euro interest payments from tax on French income .
7. Use euro rental income to cover euro mortgage payments and avoid currency fluctuations.