Buying in: Le-Grau-du-Roi
Property price: €535,000
Mortgage amount: €401,250
Mortgage type: Interest Only
Mortgage term: 14 years
Interest rate: 2.05% variable
The couple already owned a few buy-to-let properties in the UK which they rent out. They were also accustomed to working with international agents and brokers as they own a couple of properties overseas. However, this was their first purchase in France and the clients were not aware of the mortgage process. The clients were looking to purchase a property near the National Park of Camargue right by the mediterranean sea. They’ve negotiated the price down from €595,000 ask to €535,000.
Originally, clients were looking for 100% financing as they wanted to use their own funds to carry out some work on the property. Moreover, they were looking for an interest only mortgage, a product that they are used to have with their properties in the UK.
However, we have explained that 100% financing no longer exists in France unless you put down a collateral with the lender. Furthermore, lenders offering interest only products are hard to come by in France. Usually reserved for high net worth individuals, the clients had to prove that they have enough net assets that equal to the loan amount so that they can be used to pay it off. Selling the property is what the lenders would not consider as a feasible repayment strategy (even though it is allowed in the UK). However, this can be the net value of their buy-to-let properties, savings, pensions, etc. The net equity of main residence cannot be taken into the account.
By assessing their file, we were able to justify enough net equity position and we advised the clients to go ahead with the 75% LTV interest only option. We have helped the client gather the necessary documents including title deeds of their properties outside of the UK which had to be translated into English. We also assisted the clients with opening a French bank account as well as organising a life insurance which is required by most lenders in France. In this case, it was possible to use a UK based life insurance broker which in turn meant we could keep the premiums costs down to a minimum.