I recently assisted an Asian client who was looking to remortgage in France. My client’s property was valued at €2million, and he had an outstanding loan of €1million.
He needed to refinance because his existing facility was due to expire at the end of this year. His current loan was on an interest-only repayment basis, but his lender intended to switch this over to capital repayment upon expiry. This would have significantly raised my client’s monthly payments. He hoped to stick to an interest-only loan, as he planned to sell the property in a few years’ time as an exit strategy.
He had purchased the property over a decade ago, in a very different lending climate. Historically, banks were more lenient and did not require assets under management (AUM). European interest rates are now in negative figures, however, so continental lenders will generally require AUM as a condition of lending. My client was struggling to come to terms with this, so I needed to manage his expectations in this regard.
It can also be challenging to arrange finance for non-European clients. I, therefore, presented a range of potential solutions, to highlight how placing AUM would improve his options.
One solution would be to switch to a capital repayment facility, for which we would be able to negotiate favourable rates due to our extensive lender network. We could potentially arrange a facility with no AUM, at a variable rate of 1.35% on a 20-year term. However, I explained if he were willing to place AUM, we could arrange a facility with 70% on an interest-only repayment basis, again at a favourable rate.
This case highlight’s a key strength of Enness International. Our strong lender relationships and understanding of the market mean we are able to explore a full range of options, using our flexible and creative outlook to negotiate a desirable outcome for our clients.
France is one of the most popular property markets for foreign nationals: we are all aware of the chic appeal of Paris, the enduring allure of the Riviera in the summer or the freshness of the mountains in winter.
Covering everything from search and negotiation to making an offer and the legal processes, the guide will help you fulfil your dream of property ownership in France.