February 2016 – French Mortgage Transaction of the Month

HNW buyers also opting for 20-year fix, but banks prefer company structure

As we explained last month, the most popular product with non-residents is the 20-year fixed repayment mortgage at 2.70% at a loan to value of 80% and this trend remains the same. However, it’s not just the core range of buyers in the €400,000-€800,000 budget range that are opting for this product. International buyers with much larger budgets are utilising this long-term value too.

February’s transaction of the month is for a €3.7m chalet in The 3 Valleys on the 20-year fixed mortgage at 2.70%. This client bought using a company structure, which is common amongst high price purchases as it can be much more favourable when is comes to taxation. A company structure can greatly reduce wealth tax exposure and is very flexible when it comes to inheritance tax as children can be given shares at little or not cost to the property (or company) owner.

Using a company structure for a bigger loan amount also gives banks a little more confidence. This is largely due to the simple fact that they can send any statements or important correspondence to a registered French address, rather than one overseas.