How a 100% French Mortgage works

Got an enquiry today from Steven who wanted to know more about how 100% French mortgages works.

Steven asked, "Please explain how a 100% mortgage would work,could I buy a property with no money down in France with the a strong chance holiday lets could cover the mortgage,is there a catch,and what would be your fees."

Ignoring the obvious element that the loan amount would have to be affordable a 100% French mortgage is catch free. It does what it says on the tin, it's a 100% French home loan that can be used to purchase either an existing second home, buy to let or a French leaseback where the VAT is advanced by the developer. The only properties which are excluded are new build/off plan properties that do not have the 'residence du tourisme classification'. However, whilst 100% of the purchase price of the property is covered, the fees to purchase a property in France are not.

As a rule, it is not possible to buy a property in France without making any contribution at all, though the cash required might only run to a few thousand Euros for some French leaseback properties where the VAT is advanced. In general, for a second home or buy to let which is an existing building, there will be legal fees and taxes which will be approximately 7-8%, including stamp duty and mortgage registration tax. The bank will also charge a fee for setting up the mortgage and our broker fee will be no more the half a percent taking the total contribution to approximately €20,000 for a property worth €250,000.

We work with many developers and French agents offering French leaseback properties that have guaranteed rental income of between 4%-7%, which certainly covers the mortgage payments on an interest only basis and comes close to being self-financing with a repayment mortgage. The personal contribution required for these developments ranges from €11,000 to €20,000 for off plan properties in the region of €250k including deferred interest payments on sums drawn down to meet stage payments. If you were to go it alone and to rent out the property on a permanent or seasonal let you could probably also achieve a similar level of return meaning this would work for you also.

For a personalised simulation of the different loans available the best idea is to first find out how much you can borrow in France so just give one of us a call on +44 207 471 4515.

Posted in: 100% French Mortgages,How much can I borrow in France