Mortgage Update: Refinance to Take Advantage of Cheap Finance

With relatively stable property values in France (which have not fluctuated wildly in much of France since the 2008 credit crisis), record-low borrowing rates and long-term fixed products, we are seeing many of our enquiries relating to remortgaging or debt consolidation.

With the UK base rate currently at 0.1%, the Eurozone rate slipping into negative territory and poor interest on savings accounts, our brokerage partners have seen significant demand in refinancing real estate assets in France.

This is particularly true for High Net Worth individuals who are able to finance valuable assets and raise cheap finance, thus ensuring liquidity at a time when depressed real estate (or other) assets can be acquired at below-market values.

There is consensus we are heading towards a recession – if not a depression – then many property owners in France will sadly be forced to sell assets. For canny investors there will be opportunities to pick up extremely good value property leveraging this cheap finance.

Whilst the traditional mortgage market for those purchasing property has slowed down and even stopped with some mainstream lenders in France the refinancing market remains strong with private banks who understand their client demands during unprecedented times.

One of our international mortgage brokerages comments:

“Around 70% of our current book of business with HNW individuals is related to refinancing, equity release and debt consolidation. We’re seeing a lot of clients take advantage of relatively stable real estate prices in prime locations in France (Paris, Alps and French Riviera) and cheap financing solutions available. Many clients who purchased a property in cash might want to explore securing debt against the asset and putting that money to work elsewhere.”

A recent example is an equity release in the south of France. The client raised 4m EUR secured against a property valued at 6.2m EUR. The bank required 1m EUR placed with them for the duration of loan facility. Interest only and pricing at 1.25% +Euribor (floored at 0).

The European private banks providing 100% loan to value mortgage to help mitigate the currency exposure/French wealth tax and require a minimum of 20% – 30% placed with the bank for the duration of the loan facility.

If you would like to explore your refinancing options in France and have a chat with one of our panel of brokers, please contact us – [email protected]