Today, we dive into how SnowOnly can connect you with financial specialists, perfectly positioned to help you obtain a mortgage for your ski property. Plus, see to what to expect from the process and how your eligibility is assessed.
Buying a ski property can be broken down into four key steps. The first is searching for a property, the second securing the financing, followed by organising the currency exchange, and finally, the legal process, including involving a Notaire.
Last week, we discussed how SnowOnly can assist you in finding the ski home that ticks all your boxes. As well as having a property portal dedicated solely to ski homes, we have free consultations with property buyers. This allows us to get a full picture of their requirements and to suggest partners best placed to further their property plans.
In your free consultation, you may want to discuss pursuing an overseas mortgage. We have relationships with 57 banks across France, Monaco, Switzerland and Luxembourg for French mortgages. We also work with banks in Spain, Portugal, Mauritius and the Caribbean.
While we can connect you with a financial specialist at any time, it can be useful to chat early on. This is because your financial specialist can give you a better idea of what you can afford to spend and what kind of mortgage you may be able to obtain.
Securing a mortgage for a French ski property
Over twenty years ago, Dylan Mitchell secured a mortgage for his own property purchase in France. Since then, Dylan has developed expertise in helping overseas buyers do the same and founded WorldWide Property Finance.
Can foreign buyers obtain a mortgage in France?
In short, yes – they can. How much international buyers can borrow will depend on a variety of factors. These include country of residence, nationality, credit history, employment and debt-to-income ratio. The property’s value and location are also crucial. Non-residents can borrow up to 85% of the property value.
It is possible that some lenders may offer up non-resident buyers to 100% financing for specific properties and qualified buyers, but this will require other assets as security instead of a deposit e.g. share portfolio.
When assessing a non-resident’s mortgage eligibility, banks pay close attention to your debt-to-income ratio, looking for one below 35%.
The process of applying for a French mortgage
Fixed mortgage rates typically range from 4.1% to 4.5% for terms of 20-25 years. To apply, you will need the following documents: proof of ID, address, three months of bank statements and income verification (payslips for employed individuals or three years of tax returns for those that are not). The mortgage application process can take just a month, though up to twelve weeks is also normal, it is dependent on the bank.
The impact of property type on your mortgage
Fortunately, it is possible to obtain a French mortgage for an off-plan property purchase. The same goes for renovation properties.
One popular route with international buyers is the para-hotelier system, which combines ski rentals with hotel amenities. Essentially, buyers of new-build properties can reclaim 20% VAT on the purchase price if they commit to renting out the property for at least twenty years.
Case study: Why it’s important to fix your mortgage rate
One of our buyers had their sights set on a French ski home. However, they did not fix the interest rate on the mortgage before signing the Compromis de Vente, the first legally binding contract of a French property purchase. Consequently, the buyer realised that they were not able to get a mortgage, as the rate had increased.
To avoid this pitfall, it is vital to confirm the details of the mortgage product and bank that you intend to apply for before signing a purchase agreement (Compromis de Vente or a Reservation Agreement). This is because you should include details of the mortgage within the agreement, so that you are essentially agreeing to buy the property subject to obtaining the following mortgage terms:
- Name of Bank - You can't be forced to apply to another bank
- Interest Rate - If interest rates increase you can withdraw from the purchase
- Term - You don't have to accept a shorter term
- Amount - You don't have to accept a smaller mortgage amount
You should also ensure that you are only required to apply to one bank. As a non-resident, depending on which country you live in and the purchase price and the location of the property, you might find that you only have one bank to choose from. In which case you would be in default of contract simply because you don't have enough choice.
Let us take the complexity out of securing your French mortgage by connecting you with our trusted financial specialists - simply reach out for a free consultation and we'll guide you through your next steps.
Next steps
Organising your finances for an overseas property purchase does not end with securing a mortgage. Whether you use a mortgage or are a cash buyer, you will have to convert your currency into euros to complete which can lead to buyers’ budgets being vulnerable to fluctuating exchange rates. Next week, we will be covering how we can help reduce that uncertainty.
Want the complete roadmap for buying your ski property?
For a succinct, easy-to-follow explanation of the four key steps to buying a ski property, download our free brochure.
It walks you through all four steps of the purchase process, highlighting where expert guidance can make all the difference and how SnowOnly connects you with the right professionals at each stage.
