It’s always a pleasure to assist clients with financing the purchase and renovation of a home they will enjoy for years to come. I recently assisted a couple in their late thirties who were looking to buy a town-centre home in the Provence-Alpes-Côte d’Azur region of France.
Having lain uninhabited for many years, the property required extensive renovation. My clients were happy to invest the money to create their dream home. To buy and refurbish the property to the standard they desired would cost close to €900,000. My clients had already agreed on a price with the vendor and were keen to progress with the deal.
However, this created a difficulty for lenders comparing the funds they required to achieve this level of refurbishment and the value of the property itself. It was necessary to locate a lender who would take a long term view of the loan. Another pressure was timeframe; my clients needed to find a solution very quickly as they had an agreed price. They had also previously been refused a loan because they didn’t have static self-employed income history, as they had taken a year off after moving to France.
Fortunately, I deal with several private banks in France who can assist with such cases. Working in close partnership with a lender enables us to understand the sort of clients they are looking for. I have a warm relationship with a private bank located near the project and have worked with them before. In this instance, the lender had a large appetite for fixed-rate long-term loans on a capital repayment basis. Furthermore, this lender was able to work within the necessary timeframe.
After strong negotiations and the submission of a proper introduction of the project, this bank provided us with more competitive and flexible terms than other French banks were able to offer. This lender indicated to us that they were willing to finance both the purchase and renovation, so the loan to value (LTV) would be 100%.
The final agreement was a loan of €872,279 with €250,000 of this as assets under management (AUM). This lender also provided the option of releasing the AUM in proportion to the capital paid into the property. This is a cost-effective way of managing a ‘personal deposit’ in France, as “assets” can be released without the payment of additional mortgage registration fees to release equity, just a new property valuation.
The interest rate was a low fixed rate over the long term, giving my clients a clear and manageable repayment plan. My clients were very pleased with this outcome, and are looking forward to beginning the process of renovating their home.
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