How Difficult is it to get a Mortgage for a Chateau? Q&A

Alistair Lockhart answers reader questions on a diverse range of mortgage topics, from equity release and buying as a US citizen, to French banks’ attitudes to lending for château purchases…

Equity releases and mortgages as a pensioner?

I have a property in southwest France which is valued at around €200,000, owned by an SCI. I would like to obtain a lump sum of €100,000. I am 75 years old with a generous pension. Are there options available to me?

I am afraid not – your age 100% rules out any mortgage options, equity release or not. Also, even if you were 30 years younger it still would not be possible. Equity release is a less common product in France and typically is only available on properties valued over €500k with minimum loans of €200k-€250k.

Buying an apartment in Paris as an American, what are my mortgage options?

I am an American citizen working for a private US company, and live in France, and my husband is French. We would like to buy an apartment in Paris. How do mortgages in France work considering my US nationality?

Whilst there are mortgage options available for US buyers, banks have become much more risk-averse over the last 18 months. FATCA legislation always presents an issue for any US taxpayer wanting to borrow in Europe, but post-COVID it has become even tighter. Whilst it is possible, the pool of lenders providing solutions for US citizens/taxpayers has reduced significantly over the last few years.

Certainly, in my experience, the following points are likely to come into play:

• Borrower(s) must be aged under 55
• Income must be employed not self-employed
• Maximum loan to value is 50%
• Minimum loan must be €250,000
• So… minimum property price must be €500,000

Is it difficult to get a mortgage for a chateau?

We are a British family looking to invest in a château. Our budget is around €1m. It will be both our family home but also, in time, our main source of income as we intend to run an Events and Wedding business. We have heard that banks don’t like loaning on châteaux – is this correct?

To an extent this is correct. The first issue is that banks and mortgage lenders have always been historically nervous about lending on châteaux, particularly where renovation or restoration works are required. There is a long history of buyers underestimating the costs of renovating and then operating châteaux, so for banks they represent a ‘high-risk’ product. Their nervousness has only been compounded by Brexit and COVID, where the tourism market (on which many château owners rely on for a source of income) has been severely affected. The second issue is that as soon as you start looking at significant properties and talk about opening Wedding and Events venues, you are going to all into ‘commercial loan’ territory as opposed to a ‘residential mortgage’. This is much more complicated, and again, post-COVID commercial loans for tourist operations will be more scrutinised than ever before. If you don’t have a tangible track record of operating a profitable equivalent business in the UK combined with a strong business plan, it is unlikely you will succeed in obtaining a commercial loan.

If you are reliant on French finance for your project, your best best is to downgrade your ambitions and look at a Bastide or Maison de Maître. In our experience, banks will consider residential mortgages on such properties, even if they come with a couple of gîtes or outbuildings. For a ‘family home’, once you start looking at properties with more than eight bedrooms, questions will be asked about why you might need something so large – to run a business perhaps?