Saint Gervais / French Alps: €280,000 Mortgage, 70% LTV, Fixed mixed Interest Only & Repayment, 2.05% for 20years

Saint Gervais

The Profile

Property price: €400,000
Buying in: Saint Gervais
Mortgage Amount: €280,000
LTV: 70%
Type: Interest only mortgage transitioning to repayment after 7 years
Rate: 2.05% Variable
Term: 20 years

The Context

This property professional borrower was looking to buy a piece of land and undertake a substantial new build project. The bank was asking for all the signed renovation contracts from each builder before printing the mortgage offer as it liked to have a good understanding of the whole project before releasing its funds. However, some works were only going to start  in 6 months time so the client could not/did not want to decide and provide these quotes before purchasing the land and getting started with the groundworks.

Our approach

With the clock ticking, and the risk of the property slipping through his fingers, we decided to finance the purchase of the land now and deal with the financing of the build later on. For this we required a bank that is happy to finance land only, which is a rare breed.

The client chose a mixed mortgage on a variable rate. For the first 7 years, the loan is on an Interest Only basis. After 7 years, the loan switches to a Repayment Mortgage over 13 years. As the client had other financial commitments, we wanted to keep the outgoings as low as possible on the French mortgage while still applying for the highest mortgage amount to help reduce any perceived loss on the exchange rate. This was made possible thanks to the interest only part and the high loan to value. The monthly payment on the repayment part of the loan was quite high but as the client would have paid off other loans before it kicks in, he was happy to proceed on this basis.