Latest transaction: €4,340,000 mortgage for a property in Val d’Isere

Posted on 06 Oct 2023 in Transactions
Latest transaction: €4,340,000 mortgage for a property in Val d’Isere
  • Buying in: Val d’Isere
  • Property price: €6,000,000
  • Loan Amount: €4,340,000
  • Mortgage Type: Repayment *
  • Mortgage Term: 20 years
  • Interest Rate: 4.30% fixed for the duration of the loan *
  • Loan-to-value: 71%

The background

A British couple was looking to purchase a secondary residence within the biggest ski area of France, set their sights on an existing chalet in Val d’Isere, one of the nicest resorts in the French Alps, worth at the time €4.1M. They were keen to own a place in the Alps to use during the holidays. What is more, the clients wanted the property to earn some extra income during their absence and hence why they chose to set up a SPV (Special Purpose Vehicle) called SARL de Famille which will shelter the income in France and provide some income tax benefits, potentially minimising their own tax exposure in the UK. 

Buying through an means that we need to optimize the loan amount meaning that we targeted the highest loan to value (85%) without having to place any asset under management within the bank.

The client knew that he was going to renovate the chalet and even extend it within a couple of years. Therefore, we decided to get a loan of €3.4M over 20 years on a repayment basis on a variable capped rate. The idea: refinance the whole loan when doing the extension/renovation works and the variable rate would not give any early repayment charge. 

Our approach

When the client contacted us again for the works, a couple of years later, we first tried to repackage the renovation loan with the original purchase loan into one. However the original lender was not willing to do so due to change in their policy.

We scouted out other banks as we always do anyway, who could refinance the original loan and take the loan for the works as well.

What was crucial was to get a valuation on the property to estimate the current value (as it was first bought in 2021) and the value post extension/renovation. To do such, we first required the architect contract and the ‘’marches de travaux’’ (kind of contracts) from each company that will be involved plus the plans. Then we contacted one of our contacts, experts in valuation of properties in the Alps. The valuation came back with a value post work at €6M.

We ended up getting a new loan of €4.34M, covering the first loan and the works, on a repayment basis over 20 years with a fixed rate of 4.30%. 

Finally, the wealth tax on the property is not affected as the part of the debt that was linked to the original acquisition is depreciated over its original term – and the part of the debt that relates to the renovation is on the term of the new loan.

* The rate / the product may differ to what is currently offered since this mortgage has been agreed.

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