Buying in: Les 3 Vallées, French Alps.
Property price: €1,455,000
Mortgage amount: €1,018,500
Mortgage type: Repayment
Mortgage term: 15 years
Interest rate: 1.55% fixed
The client heads a division of a major investment bank in London. The couple are British citizens and British residents.
The clients were looking to invest in a holiday family house outside of the UK. They have been to the French Alps on number of occasions, in particular the Three Valleys. They have decided to invest in an off-plan, second residence/investment property. Investing in new built attracts an important discount in taxes most notably stamp duty.
The clients have also decided to structure the purchase by using a special purpose vehicle (SPV) for inheritance planning. In this case, we decided to purchase in an SARL de Famille. This has also benefits when one plans to capitalise on the location of the property. They will be using it a few weeks a year for family gatherings and the rest of times it will be rented out to other mountain enthusiasts bringing in a good source of revenue helping to cover the mortgage payments.
They decided to purchase a property in the very popular resort of Courchevel – La Tania. With access to over 650km of pistes, Courchevel is an ideal place for skiers and non-skiers alike. There are plenty of things to do and see.
Clients have had a flexibility on the down payment and were looking to optimise their cash. One way to do this is by reducing the interest payments over the duration of the loan. We have decided to apply with a French lender who offered a 70% loan-to-value (LTV) without placing savings with the bank as collateral. With a very comfortable debt-to-income ratio (DTI), significantly below the 33% required by the bank, the clients were able to afford a 15-year repayment mortgage.
We were able to secure an advantageous rate of 1.55% (the rate is slightly increased as the purchase is through a company) thanks to the shorter term. Despite the fact that the monthly repayments would be over €1,000 more than on a 20 year mortgage, a result, we will save the client over €80,000 in interest payments by optimising their borrowing.