Capped payment mortgages for investors

Since the beginning of the year we have had a large volume of investors buying leaseback properties all over France. Whilst interest only products for these sorts of purchases have been popular in the past, many investors are now choosing repayment products for their leaseback properties as current rates are so low.

One of the attractions of taking out a French repayment mortgage is that the monthly payments on these mortgages are usually capped in some way, giving security. Whilst 25 year fixed rates are available at about 4.5%, variable rates are 2.4% for this duration, making the headline numbers for investments with 4% yield look very manageable.

For example one of our partners has a leaseback with a household name management company where a 5% deposit will get you a property of €300,000 on a repayment basis over 30 years with a monthly payment after rental income is taken into consideration of less that €100 per month. This payment will remain more or less fixed as both the rental income and the monthly payment increase by the rate of inflation.

If you put your deposit and €100 into a savings account you would need an average rate of return in excess of 10% per year to get close to the a rate of growth in the value of the property at 2.5%. Interesting eh?


Athena Mortgages will keep you up to date

This is the first monthly newsletter from Athena mortgages which is in direct response to the number of people requesting to be added to our mailing list on our website. In this newsletter we will keep you up to date on the factors affecting the French mortgage market for international investors, as well as information on products and interesting case studies. We hope you find this synopsis of key information useful and if you have any requests for information you would like to see here on a regular basis, please let us know.

 

Rates move up due to EU economy fears

Average rates seem to be trending upwards as it seems less likely the ECB will raise the base rate. Banks are looking for other ways to boost their coffers, so are raising margins to enable them to offer higher interest rates. The news from the savage cuts to public spending required in Greece, Spain, Portugal, Ireland and the UK will mean lower inflation for the medium term. We have locked in some rates for offers published in the next 2 months but clients have to move quickly to provide complete applications to stand a chance of getting the rates and conditions.