French remortgage - interest only type

G

ged40

Guest
Hi all, has anyone got any experience or info on Interest only mortgages in France ? I want to remortgage and would appreciate any help available.

thanks Ged
 
Re: FRENCH REMORTGAGE Interest only type

We got a mortgage from AIB on a french property that is interest only for 2 years and then reverting to normal.
They have since told us that it was so much trouble for them that they will not consider doing it again and if we want anything else in France we should go to a French bank.
 
Hi we purchased an apartment in France last year and decided to take out a French mortgage as opposed to one here based on the equity built up on our home. Our experience was that you can get any type of mortgage that you want, interest only, interest and capital or combination of, fixed, variable etc. But that you wont get a 100% mortgage. We got 80% and were told that the norm as only 70%.

However, 1) the costs associated with taking out the mortgage (mortgage fees, life cover etc, were considerably higher than what an equity release here would have been and 2) the amount of paperwork that was required was quite extraordinary. French backs have a very different attitude to risk than their Irish counterparts. The 20% that we organised here took 2 weeks from start to finish the 80% in France took 6 months. That said we got a very attractive fixed rate for 20 years and that was the main reason for going with the french mortgage.

To take the hassle out of it we used the services of Capital Financial Partners. The service is not cheap but in hindsight I would say that it was good value as our case officer was superb. As I dont speak French I dread to think what it would have been liken dealing with a French back directly. Hope thats of some help.
www.cfpworldwide.com

 
Thanks Woods and Crazywater , will have a gander at those options.

Ged
 


The hassle is exaggerated here. The French are bureaucratic and more risk averse, but 6 months is ridiculous. Norm is 80% LTV over 25 years max at around 3.5% (We found 3.3% over 15 years on 80%.) Set-up costs aren't huge - around 900 Euro average. Decision and offer take 2 weeks or so.

This is with french lenders for non-residents. English-speaking banks charge a lot more.
 

Riviera, I did not exaggerate anything here. As I said at the start of the post this was our experience. I did not say that 6 months was the norm but it is what occured in our case. Part of the reason was the French banks instance on getting written letters from consultants over very minor instances disclosures on the medical form. We lost a month because the bank wanted the consultant to write directly to them but the consultant insisted on writing only to us. It eventually took the intervention of our case officer from cfp to contact the consultant directly to explain the situation. The offer from the bank once we submitted all the initial request documents (wage slips, bank records etc etc) was very quick but to actually finalise the mortgage took six months. So who is to blame the overly bureaucratic French or the Irish consultant, answer it doesnt matter it still took over six months. BUT THAT IS JUST OUR EXPERIENCE PLEASE BE ADVISED THAT THIS MAY NOT BE THE NORM.
 
We also found French banks to be incredibly slow on a couple of occasions. We actually lost a purchase due to one bank being so slow. Talk about red tape. It was an incredibly slow and painful process. There never seems to be less than 20 people all dealing with the one application- all have to have the file in a particular order- no one of them can deal with everything. They seem extremely afraid of stepping over the mark in what they deal with. The only way we could deal with them was to just forget about them and wait until they eventually revert. If you try to speed them up, frustration awaits.
 
CrazyWater, may I ask what rate you got ?

I'm going through the process of getting a French mortgage at the moment. I've just been told that I'm approved & it's a fixed rate of 4.98% for 20yrs - only problem is that they've done a Capital & Int mtge & not an Interest only as I requested.
My plan is to hold the property for about 10yrs & to be able to pay the mtge from the rental income. This could only happen with an Interest only mtge as it would be off the wall to expect €1400pm in rent for a 2 bed apt.

To add insult to injury the Mortgage brokers are looking for a fee of about €3k for arranging this.They'll have to get it sorted fairly promptly if they want this fee ! Is this usual for brokers to get a fee in France ? Do people pay brokers fees in Ireland ? I always thought they worked on commission from the financial institutions....
 
Hi Perplexed
We got a fixed rate of 3.5% for 20 years but we got that rate about 12 months ago. Given the recent interest rate increases I'm not surprised that the rates have gone up. Our choice was to go with capital and interest so I can't really advise you on that particular issue with the bank.

Our plan (which is always subject to change) is to keep the property for the 20 year term as we view it as being part of our pension plan. However, like you we may choose to sell after about 10 years. Make sure to check that you are content with the penalties that will apply for early repayment.

The fee of 3k seems very high. Our set up fees were consistent with what Riviera has reported. We also payed a fee of less than €500 to captial financial partners (the broker) and as I said it was well worth it as they set up the mortgage and french bank accounts for us. I honestly think we would not have completed the purchase without their help.
 
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