June 2016 – French Mortgage Transaction of the Month

USD buyer utilises double benefit of mortgage & currency rates

A late entry for June’s transaction of the month. Strictly speaking, this is still a pending transaction but we had to showcase it simply due to the huge value in the numbers.

Our client, based in the UAE (where the Dirham is pegged to the dollar) had his buying power boosted by 4% on the euro overnight after the referendum. Even before the Brexit referendum announcement, USD had become over 22% stronger on the euro since this time in 2014.

Whilst fixed rates for non-residents across the board are now down to around 2.15%, if the property is in Paris it is possible to negotiate even lower rates. French banks often feel more secure about lending on real estate that is located in markets that have strong domestic and international appeal. Paris is at the top of this list, closely followed by large resorts in the French Alps, where tourism underpins the market.

We are negotiating a rate for him of 1.55% fixed for 20 years with a loan to value rate of 80%. The loan value is around €600,000 and his ability to move quick on both the currency and mortgage rates is going to secure him huge amounts of value over both the short and long term.

For those looking at buying property in Paris, these preferential rates are dependent on the buying profile. Generally as a couple, gross income needs to be in the region of €100,000, with a single applicant requiring €70,000 income before outgoings. Working for a large internationally-known corporation is also prerequisite.