The French Alps continue to be a prime destination for ski property investments.
Understanding the intricacies of financing such purchases is crucial for potential buyers.
In a recent interview, Dylan Mitchell, founder of WorldWide Property Finance, shared valuable insights into the French mortgage landscape for non-resident buyers.
The French Mortgage Advantage
French mortgages offer unique benefits for ski property buyers:
- Fixed Rates: Unlike many countries, French banks typically offer fixed-rate mortgages for the entire term, which can be up to 25 years. This provides long-term financial stability for buyers
- High Loan-to-Value Ratios: Non-resident buyers can often borrow up to 85% of the property value, making property acquisition more accessible.
- Tax Efficiency: Mortgages can be used as a tool to mitigate French wealth tax, which is levied on equity rather than the total property value.
Mitchell emphasises the importance of obtaining a French mortgage rather than financing through other means: "It makes more sense to keep the debt in the same currency as the asset, avoiding currency risk."
Navigating the Application Process
Securing a French mortgage requires careful planning:
- Early Engagement: Mitchell advises contacting a mortgage broker as early as possible in the buying process. "If we can get a head start on that process, then great. Everybody can relax, and we can just be done quite quickly," he states.
- Documentation: Typical requirements include proof of ID, address, three months of bank statements, and income verification (payslips for employed individuals, or three years of tax returns for self-employed buyers).
- Timelines: The process can take anywhere from one to three months, depending on the bank and the complexity of the application.
Off-Plan and Renovation Financing
French banks are open to financing various property types:
- Off-Plan Properties: Thanks to robust developer regulations in France, banks are willing to provide mortgages for off-plan purchases. Mitchell explains, "The whole system works incredibly well."
- Renovations: It's possible to finance both the purchase of a property and planned renovation works simultaneously.
The Leaseback Option
While leaseback properties were once popular, Mitchell cautions that financing options for these have become limited, especially for international buyers. He suggests considering the more modern "para-hôtelier" structure, which offers tax incentives for properties rented out on a short-term basis, similar to Airbnb.
Current Market Conditions
As of October 2023, interest rates for fixed-term mortgages typically range between 4.1% and 4.5% for 20-25 year terms.
The market has also seen improvements in mortgage availability for non-residents, with new broker-only banks filling previous gaps in the market.
Wrapping it up
Financing a ski property in the French Alps can be a complex process, but with the right guidance, it can also be a smooth and financially advantageous one. Early engagement with a specialist broker, understanding the unique aspects of French mortgages, and careful consideration of property types can help buyers navigate the process successfully.
As Mitchell summarises, "It's far better to have your mortgage offer a couple of weeks after signing the purchase agreement. Then everybody can just relax."
Save time, money, and avoid pitfalls with international property financing contact Dylan here: