Latest transaction: €1,906,200 mortgage for a property in Courchevel
- Buying in: Courchevel
- Property price: €2,118,000
- Loan Amount: €1,906,200
- Mortgage Type: repayment
- Mortgage Term: 20 years
- Interest Rate: 1.35% fixed
- Loan-to-value: 90%
From the first call, the client made it clear that he was very sensitive to the rate and wanted a high LTV.
The challenge is that these two requirements usually do not go hand in hand; that is, the more you can put down the greater the number of lenders we can work with and therefore the lower the rates.
Indeed, banks can generally propose better terms if you leave funds with them as additional collateral for the loan. Instead of providing just a mortgage, the goal is to establish a wider relationship with the client by proposing a packaged solution for banking, insurance and investments. This means a low cost option overall particularly for large loans but less flexibility than with a non-resident specialist.
In this case, we went for a 10% deposit plus a 20% pledge invested with the lender, so a total security of 30% but a higher leverage on the property to take full advantage of cheap borrowing. The goal here is for the investments to cover interest and management charges without taking too much risk. This is not straightforward in a world where cash has a negative yield but the rational is to lock in long term value with the finance so that the borrower has more funds to yield returns when opportunities arise.
As with most Alpine property investments, the property offered a good mix of holidays-let and personal use; hence, the rental income more than covers the interests on the loan. The notaire recommended an SARL for the purchase to shield the property from UK income tax.