Latest transaction: €1,070,000 loan for a property in St Martin de Belleville
- Buying in: St Martin de Belleville
- Property price: €1,500,000
- Loan Amount: €1,070,000
- Mortgage Type: amortising (refinance)
- Mortgage Term: 20
- Interest Rate: 1.36% fixed
- Loan-to-value: 71%
The context
Our client is a British resident who was looking to refinance his property in the French Alps that we helped finance a few years ago. He was seeking for a better cash flow flexibility by extending the remaining mortgage duration and was attracted by the possible lower rate.
It is important to know that refinancing a mortgage in France is not very popular as generally the rate you have is already low and fixed for a long duration.
Our approach
Initially, our client had a fixed rate over 20 years of 2% with Credit Foncier which stopped lending in March 2019. It is not every day that we can beat a 2% fixed rate over 20 years but we managed to find a partner with a lower rate and we dropped it down to 1.36% fixed over 20 years.
As the duration was increased from 17 years to 20 years, the savings in terms of interest were reduced. The profit was about €20,000 net after paying the new fees related to the mortgage while it could have been about 40,000 € net if we had maintained the duration to 17 years.
The reason to increase the duration was to reduce even further the monthly payment to have more flexibility on the monthly cash flow and also to be able to offset the interest against the rental income to reduce the income tax a bit longer.