France is in an increasingly popular destination for investors from the UK who are looking to purchase abroad. The country’s popularity is partly due to accessibility and partly to the comfort that British people feel with the French legal and financial structures.
French Mortgage Types And Options
With so many mortgage providers in France and such a wide range of mortgage types and terms available, it is extremely important that you consider all of the relevant options to make sure that you secure the best possible deal.
One thing to bear in mind is that various ¡¥leaseback¡¦ schemes are available, in France. These work by offering buyers the opportunity to lease their property back to the developer, immediately, so that it can be let out to renters. As part of this type of deal, the purchaser will almost always be guaranteed a certain return for a set period of time.
Although this may appear to be a good way of obtaining income security, it is essential to realise that there are also some downsides to this approach. If you are guaranteed a rental of say 6 percent per annum, then this is exactly what you will receive. If the property actually makes a large income, the difference will be taken by the leaseback company.
It is also worth noting that although you will have a guaranteed income for a period of time, once this period has passed there is no guarantee that the income stream will be maintained. In many cases, developers will offer leaseback on properties that they are otherwise struggling to sell.
When the leaseback period ends, there will suddenly be an influx of properties that have been on the scheme. Owners will either be looking to sell the properties or to rent them privately. Either way, this is likely to have an effect on the pricing as there will be a large supply which may not be met with a similarly large demand.
Buy to Let
Buy to let mortgages are readily available in France, but are generally only an option if the property is going to be let on a long-term basis. In France, long-term let is considered to be any let which is for longer than 3 years. Generally, properties that are used for holiday lets do not qualify for a buy to let mortgage, although some lenders may take a more individual approach.
French mortgages are available for a range of different purposes including buy to let, renovation and building works;
France is also one of the main countries that offers leaseback schemes;
although a leaseback scheme can offer a degree of security of income, it can result in a glut of available properties at the end of the scheme, thus forcing prices down; so make sure you carry out your own independent research on the viability of the property as an investment.