Paris is not only the most popular tourist destination in France but also across the whole of Europe, leading to ever-growing demand for property in Paris. Demand for Paris mortgages has played a major role in the development of the French mortgage market. This is a market which attracts not only French property investors but international investors and expats from around the world. We have a long-standing association with the Paris property market and as a consequence can structure French mortgages to suit your particular situation – or look international.
French mortgages for expats
The expat mortgage market is one which can be complicated with finance deals often requiring a high degree of structuring. French mortgage companies traditionally lend funds up to 85% for properties with a value up to €5 million. This level of finance is not exclusive to French investors with identical terms available to EU residents although non-EU investors may incur additional costs. In order to secure French mortgages, expats will need to reveal their worldwide income and expenditure. Typically, the debt serving ratio cannot exceed 35% of a client’s income which can be problematic for those with complicated finances.
International mortgages for French property
The strict debt serving ratio introduced by French mortgage companies initially created a vacuum with many expat investors unable to fully utilise their financial strength. Very quickly this was filled by international and private banking institutions which recognised the need to look at the overall picture, worldwide income and assets. As a consequence, due to our independent status and arm’s-length association with all lenders we are able to service this often complex area of the market.
International and private bank mortgages take a different approach to mainstream French mortgage providers by using worldwide income and overall wealth to calculate eligibility. Many also offer the option to lock in what are currently relatively low interest rates for between five and 10 years. Using a mix of contacts in the French and international mortgage markets we are able structure a number of different deals.
Pledging collateral against private bank mortgages
Private Banks have a different outlook to their commercial counterparts and tend to be more flexible with mortgage deal requirements. Typically they will require an asset pledge to sit alongside mortgages of at least €1 million. This tends to be between 20% and 50% of the outstanding mortgage with equity release considered in the right environment. We can advise you on the type of assets to use as collateral and when you should request equity release along the way.
Development finance in Paris
Our contacts in the international finance markets also facilitate development funding for up to 100% of the project cost. This will include an array of different elements such as:
- Notaire fees
- Building costs
In order to mitigate French wealth tax, part of the deal may involve the transfer of capital or assets into an asset management arrangement. This can be as low as 20% of the development finance with a portion of assets under management allowed from loan capital.
Different mortgage currencies
While those looking to acquire property in Paris will likely require a euro mortgage, it is worth noting that we can put together an international mortgage in any currency. In order to add a degree of stability these can be fixed-rate, variable rate, EURIBOR tracker, capped or a hybrid structure. Interest rates can currently be fixed at around 1.5% due to the historic low level of base rates across Europe. So, why not let us look at moulding a deal around your situation to minimise finance costs and enhance long-term returns.
Attention to detail in the French Mortgage Market
Many people make the mistake of assuming a like-for-like scenario when investing in foreign lands even though taxation regulations can and do vary. We can advise you on all aspects of your finance deal, from taxation to foreign exchange, from the legal structure to insurance. Finance for purchases, refinancing, development, equity release and bridging finance is readily available. We have also completed an array of specialist projects such as leaseback arrangements and Vente en l’état futur d’achèvement (VEFA) contracts for off plan French property.
Our experience and contacts are spread right across the field of finance thereby ensuring the best deal structure with the lowest financing costs. It also allows us to mitigate legal costs (up to 7.5%) and the French wealth tax (1.5%) by structuring your mortgages finance in the most efficient manner. We deal with international and private banks on a regular basis and are kept abreast of the best deals and changing markets. Our specialist brokers can source preferential rates and terms which are not readily available to others.