Rates for French remortgages and French equity release mortgage rates

Remortgaging or releasing equity from your property in France can be an interesting as the process is quite unusual. There are a variety of reasons why refinancing an existing mortgage in France is not a common occurrence and subject to different rules and procedures from those in the UK. One reason is the existence of mortgage registration tax in France of approximately 1.5% when you bought your property. Every time the notary registers a charge against a property there are some transaction fees and taxes, which in the case of a French remortgage are called ‘frais de main levée’, literally cost to take the hand off, and then some fees to register the new mortgage amount for the new bank. Overall the fees for remortgaging your French property will be in the region of 2.5%, which depending on the current rate you are paying on your mortgage may be attractive.

Given the popularity of fixed rate mortgages in France, most people fixing for 20-25 years, it is easy to see why the market to remortgage properties in France is not that active, as most people are comfortable with the rate they have chosen. In addition, almost all fixed rate mortgages in France have an exit penalty of up to 3% or 6 months interest (half the interest rate on the mortgage) making the overall cost of the remortgage up to 5% for those on a fixed rate. Overall we can see that the cost of remortgaging may make the savings on the monthly payment not all that worthwhile for those on a fixed rate whilst those on variable rates can breathe more easily as there are generally no exit penalties or early repayment penalties on variable rate mortgages in France.

For those seeking to refinance a loan in France or to remortgage a ‘capital and interest’ loan, switching to interest only, the outlook currently is not favourable. Only those borrowers with the best profiles will be able to succeed in convincing a bank of the need to do this. The news coming out of most French banks is that such requests will be refused as lending policy seems to have changed against offering interest only loans for all types of mortgages in France not just French remortgages.

On the brighter side, those with large amounts of equity in their property in France or those who bought their property 7-10 years ago may find that with rates so low it may well be worth incurring the costs of remortgaging or releasing equity in France. The euro remains fairly strong against many currencies, though not the Aussie or US dollars, and so the benefits of transferring a large amount of equity home to places like the UK may well make sense at today’s exchange rate. For anyone with a rate over 6% it also makes sense to seek a French remortgage as you can certainly make the money you outlay in just a few years.

In terms of the documentation required to remortgage, you will have to provide proof of income, identity and your last three months bank statements together with the deeds of the property and the original mortgage offer. If you would like further information on French remortgages or equity release to see the current best rates for remortgages and equity release mortgages in France just pay us a visit or call us on +44207 471 4513.

Posted in: French equity release mortgages,French remortgages