HOW CAN I MAKE THE MOST FROM MY FRENCH PROPERTY?

French lenders have traditionally been unwilling to offer re-mortgage or equity release mortgage deals. Assetz Finance has worked with French lenders over the years in order to release a number of exclusive re-mortgage and equity release packages for our clients. These products allow you to make the most of the capital in your French property.

The products allow our clients to re-mortgage to a better mortgage package than their current deal whilst also releasing cash from the property that has risen in value since its purchase. Owners of French property that they purchased outright, using savings, can now unlock these funds from the property using our Equity Release products.

MAKING THE MOST OF CURRENT EURO RATES

Equally, whilst the Euro remains strong against the Pound there is a lot of sense in moving a lump sum of Euro denominated cash (released using a mortgage secured on a French property) back to the UK. Whilst a lump sum of €30,000 moved from France back to the UK at the end of 2006 would have given the borrower £20,130, today this amount would offer the borrower a return of £24,000 – a significant increase.

HOW CAN I USE THE CASH THAT I RELEASE? .

Funds raised in France in this way allow UK borrowers to repay more expensive debts back home, such as credit cards, loans and mortgages on higher rates.

To gain the most competitive mortgage product for equity release, the lender needs to be aware of, and agree to the borrowers’ plans for their raised funds. Most lenders are happy to assist borrowers raise funds from their French property in order to buy and refurbish property, to pay off existing debt or to invest.

If the funds are to be used for business reasons (to start or invest in a business venture) a Commercial Mortgage will be required, although these are not offered by all lenders. Please consult our French Commercial Mortgage pages. There are also restrictions if the property to be used for the equity release is owned by a French holding company, with only certain lenders able to assist. It is therefore extremely important that the right lender is sourced depending upon the intended use of the funds.

The most attractive mortgage deals for releasing the equity in a French property are only available if the raised funds are deposited with a Notaire, who will then ensure that they are paid directly to their required destination – such as the builder carrying out the refurbishment of your property, the solicitor in charge of your intended purchase, the bank whose mortgage you are repaying or a solicitor in the UK, who will ensure that the UK-based lender is repaid.

USING EQUITY RELEASE FOR RENOVATION WORK

If the equity release is needed to pay renovation invoices, requiring payment at different stages, the lender will release funds in instalments either via the Notaire or to the builder directly (on receipt of the invoice). If the reason for the fund raising means that the Notaire is unable to transfer the funds to the required source and their only alternative is to pay them directly to you, in certain circumstances, this will mean that the mortgage package offered will be different.

PERSONAL LOANS RATHER THAN MORTGAGE PRODUCTS

If the funds have to be transferred directly to the borrower rather than the Notaire, the mortgage will be considered as a type of personal loan rather than a straightforward mortgage and, as such, there are differing laws governing this type of borrowing. The same applies in the UK, where the FSA regulates the issue of mortgage products whilst the Consumer Credit Act governs the issue of personal loans. Whereas a borrower in France must wait 11 days before they can accept a mortgage offer and therefore authorise the release of funds, a personal loan has no such restrictions and funds can be accessed much quicker. This is useful when the borrower’s circumstances dictate that funds be raised as quickly as possible.

The disadvantage of the secured personal loan product is that the interest rate offered is normally slightly higher than that on a mortgage. Other conditions may also be less favourable.

KEEPING FUNDS AVAILABLE FOR A RAINY DAY

Homeowners who have a large amount of equity tied up in their French property but have no urgent need to release all of these funds, can consider arranging a mortgage facility whereby the maximum amount of mortgage is approved but not necessarily drawn upon until a later date. The borrower will then have cash available to them in the future without having to repeat the mortgage application procedure. This allows easy access for future requirements, with no obligation to use these extra funds if they are never required. Interest will only be calculated on the funds that have actually been released, rather than the whole amount of the agreed facility.