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Holiday Home Purchases: What HNWIs Should Know

6th May 2022
Hugh Wade-Jones GROUP MD

Hugh Wade-Jones

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Holiday Home Purchases: What HNWIs Should Know
GROUP MD

Hugh Wade-Jones

France and Monaco

France remains one of the most popular countries in Europe for holiday homes, and it's easy to see why. There is always an abundance of prime property to choose from in hotspots, and France offers a geographical variety that's not really seen anywhere else. Very few countries can provide prospective buyers with the choice of a city as cosmopolitan as Paris, the Alps for sporting holidays and the glitz and glamour of the Côte d'Azur.

Monaco is almost incomparable with anywhere else when it comes to luxury property – it’s not known as a "billionaire’s playground" for nothing. The Principality is home to some of the most expensive real estate in the world.

We broker mortgages of at least €1.5 million for French and Monaco property purchases, and we can help international buyers from anywhere in the world. To buy at this level, you will need to have an income of at least €250,000 per year and net wealth of €2 million. Expect to put at least 30% assets under management (AUM). Dry mortgages that don't require AUM are still an option, but only if you have a high net worth. There's no fixed net worth that "unlocks" dry mortgages in France and Monaco but expect they will only be a possibility if you have wealth totalling at least £6-7 million – sometimes more, depending on your situation. 

Spain And Portugal

Spain and Portugal remain popular destinations for holiday homes thanks to the fantastic climate, culture and array of prime properties in sunny enclaves close to the sea. Enness brokers Spanish and Portuguese mortgages, starting at around €850,000. We focus on helping our clients to access property finance in the Algarve and Quinta do Lago in Portugal and the Costa del Sol as well as Mallorca, Menorca, Ibiza, and Formentera (where the highest value property in the region tends to be located) in Spain. AUM isn't a fixed requirement for Iberian property purchases the same way it is in France. To benefit from a dry mortgage for prime property, expect that lenders will want to see you are in a great financial position and have very solid income. 

Italy

Enness brokers Italian property finance of €2 million-plus. For holiday home purchases in this range, expect to see lenders require AUM of at least €1 million. There is still an appetite for high-value property purchases exceeding €2 million, but note that however much you want to borrow, the maximum net LTV for Italian property purchases is 70%. Even putting AUM, you will need to make up any difference in cash if you don't meet the 70% LTV threshold.

Switzerland

The security, stunning vistas and world-class slopes have reaffirmed Switzerland as a fantastic location for holiday property ownership for mountain enthusiasts. According to UBS, the price of a Swiss Alpine holiday retreat rose 4% between 2021 and 2021, the biggest annual rise since 2012. Enness broker loans for Swiss property purchases of CHF 2 million and above. 

Self-builds and Construction 

Generally, it is harder and harder to finance high-value self builds and construction loans for holiday properties. Lenders are aware of decreasing margins, rising material costs, supply chain difficulties and labourer challenges, and we do not currently broker finance for constructing holiday homes. The exception is in France, where we can broker property finance if you are a "marchand de bien." If you are buying into a development in France, Italy, Spain or Portugal that you are not building yourself, Enness can broker an international mortgage. 

Bridging Loans For Holiday Home Purchases

While most borrowers typically search for a mortgage for a holiday home purchase, bridging loans can be a great alternative to explore. Bridging loans are a type of short-term finance secured against a property in the UK or abroad, and they can be organised very quickly (think weeks), allowing for speedy completions. 

Bridging loans are a great way to buy international property, but they aren't for everyone. These loans typically last from a few months up to about three years, and you can either refinance the loan to a longer-term product like a mortgage or use a "liquidity event" to repay your lender. A liquidity event could be everything from a financial windfall, selling assets, disposing of another property in your portfolio, selling a business, a divorce settlement and so on.  

Bridging lenders are different from banks and don't usually need to see AUM. A major plus in the context of current affairs is that depending on how they are funded, many lenders have no connection to banks, which means they haven't raised their rates due to the BoE's base rate increase.  

Key Takeaways For Anyone Buying Prime Property Abroad

A helpful way of looking at buying international property finance in today's world is to remember that lenders want to share risk with you, which is reasonable. The very best and most flexible finance is available – as it always has been – to the wealthiest and most liquid borrowers. For everyone else, there are still great deals to be had, but they will need to be balanced with the lender's risk appetite and the strengths and weaknesses of your financial background, which is where Enness come in. 

With a track record negotiating high-value international property finance, we can approach the lenders for best finance offers for your individual situation. We can present your case in exactly the right way to entice lenders to reduce headline rates as much as possible. "Presenting your case strongly" is rarely as simple as just laying out your assets or income and waiting for a lender to offer a dry mortgage, the lowest rate, or the flexible terms you wanted on a platter. We will look at the merits of your case, but also identify any details that might cause a lender to hesitate at giving you their very best offer. Then, we go to work getting you the most competitive mortgage for your new holiday home.