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France has always been a popular destination for property investments. For many people owning a chateau in France is like a dream come true. With each of its 22 regions offering something unique from stunning coastline and majestic mountains to artistic cities and quaint villages, the popularity of French property is hardly surprising. If you too dream of owning a luxury property in France, here is how you can finance it.
Mortgage options
Mortgage is the most common method of financing a second or a permanent home in France. For mortgage you can either approach brokers or banks in France or borrow from lenders specializing in overseas properties in your home country. There are pros and cons to both the options. You need to carefully consider all the benefits and drawbacks before making a choice.
The process of finding a suitable mortgage for purchasing a French property is fairly simple. A wide variety of mortgage products are available in French as well as overseas markets. Making the right choice is essential to avoid future hassles. A majority of mortgage loans are repayment, but the interest only option is being offered by an increasing number of French banks. Most lenders in France allow you to choose either a variable or a fixed mortgage rate. The deposit for these mortgages can range from zero, i.e. 100% mortgage, to paying as much as possible. Based on the mortgage plan chosen, the repayment duration can range from five to thirty years.
French landscape is peppered with a number of old castles and chateaux, which although extremely charming often need renovation. Financial institutions in France lend money for property renovation as well. There is an increase in buy-to-let and leasehold mortgage options as well. If you intend to develop or buy French property for the purpose of renting, you can offset the interest payments on your mortgage against earning from the rent. With the assets of most house owners tied up in real estate and, people living longer and retiring earlier, the popularity of equity release mortgages is also increasing. If you are not sure about the best mortgage product for your individual situation, it is advisable to consult a qualified financial advisor.
How much can you borrow? Flexible loans up to eighty-five percent of the property value are offered by most French banks and other major financial institutions. The percentage of purchase value offered as mortgage differs based on the nationality of the borrower. Most Europeans can borrow up to 85% of the property value. Mortgage of up to 75% of purchase value is usually offered to non EU nationals. You may also be able to get 100% mortgage from private lenders. The repayment duration for loans varies based on the lending bank and the age of the borrower. Typically 15% is the minimum deposit amount. This along with approximately 8% notary costs (1% administration fee, 1% mortgage assignment fee and, 6.3% stamp duty and other government taxes) need to be funded by the buyer.
About the Author: Penny is an expert associated with an international realty company that offers a range of luxury villas for rent in France and worldwide. If you are looking for luxury villas for rent in France, the company offers great deals for holiday homes.