€3.85M French Riviera Mortgage Refinance Releases Equity for Property Renovations

Two South African nationals permanently residing in France needed to restructure the borrowing secured against their primary residence on the French Riviera. They held a property portfolio in Southern France valued at over €10m and owned a successful business in South Africa. However, much of their liquid capital was committed elsewhere.

They required a facility of approximately €3.85m to meet two main objectives:

• Refinance: Repay an existing mortgage of approximately €2m.
• Release equity: Raise around €1m towards extensive renovation works, while retaining flexibility over their remaining capital.

The cross-border nature of the application created two particular challenges. The clients' income came from a South African business, while their property and borrowing requirements were based in France. Their preferred banking relationship also came with an asset-transfer condition that did not suit their plans.

Incomplete foreign tax documentation

Because of the timing of South African corporate fiscal cycles, the clients could not provide an up-to-date localised tax return. This limited the number of lenders able to assess the application using their standard income-documentation requirements. The case therefore needed a lender willing to consider other evidence of the clients' financial position and business income.

The €1m AUM requirement

The clients' existing bank was prepared to consider the refinance only if they transferred €1m in additional assets under management to the bank. They did not want to commit that level of liquidity to the banking relationship and were prepared to place no more than €150,000.

AUM conditions are not unusual with French private banks, which is why some borrowers explore French mortgages without an AUM requirement.

There was also a timing consideration. The clients intended to sell one of their secondary French properties and wanted the flexibility to repay the mortgage early without incurring an early repayment charge.

Using its international mortgage network and private banking relationships, Enness presented the application to a specialist private bank in Monaco with experience assessing international high-net-worth clients.

Rather than relying solely on the missing tax documentation, the application was supported by a broader picture of the clients' financial position. This included verified corporate bank statements, direct confirmation from their accountant regarding distributions from the South African business, and details of the equity held across their wider French property portfolio.

The lender was able to consider this information as part of its assessment and agreed to a structure that addressed the clients' main requirements.

• Reduced AUM requirement: The lender accepted an asset contribution of €150,000, rather than the €1m initially requested by the incumbent bank.
• Five-year interest-only facility: The agreed structure reduced the clients' monthly repayment burden while they allocated capital to renovation works. As the facility is interest-only, monthly payments do not reduce the outstanding loan balance. The clients planned to repay the borrowing through the sale of a property in their portfolio.
• No early repayment charges: The agreed facility had no early repayment charges, giving the clients flexibility to repay the mortgage early if their planned property sale proceeded.

The resulting facility totalled approximately €3.85m, covering the existing mortgage refinance and the additional capital required for renovations.

The arrangement addressed the clients' need to refinance and raise additional capital without committing €1m to the lender's AUM requirement. The reduced asset contribution left more of their liquidity available for other purposes, while the interest-only structure provided a lower monthly repayment obligation during the agreed term.

The absence of early repayment charges was also relevant to the clients' plans. They intended to sell a secondary property and use the proceeds to repay the borrowing, although the sale and future repayment were not guaranteed.

For international property owners, a lender's assessment can depend on more than the property offered as security. Income earned overseas, business structures, existing assets and the amount of wealth a bank expects a borrower to transfer can all influence the available options.

This is particularly relevant when considering French mortgages for international and non-resident borrowers, where overseas income and assets may not fit standard domestic lending criteria.