English
FrançaisI read somewhere that French lending institutions will not take the future earnings from rented property into account when calculating how much they are willing to lend to prospective buyers. Has anyone had practical experience of running into this problem ?
Surely they are being too cautious, especially as rental income is guaranteed under the leaseback scheme.
If it is true, I will need to raise the purchase price through other means (within reason of course - I won't get carried away)
Will keep forum posted about how I get on
New Mortgage Finder has just secured an exlcusive Leaseback deal with one of it's many lenders.
The July deal- Interest only for the term of the loan, rates are capped and the duration can be extended or reduced depending on rate changes. The lenders fee normally 1% is reduced to between 0-950€, rates start as low as 3.15% and can be linked to 3 or 12mth euribor. With a 1.2% margin this is the best scheme currently availble in France. In addition 100% interest only is available with the normal 30% deposit bond or slightly higher rate 80% interest only lending is available with no investment needed. NMF fee just £750. email Steve Morgan nmf.team@newmortgagefinder.co.uk
On further investigation - some (but not all) French banks will take future rental income into account.
Next problem : As an Irish resident it seems I will have to pay full income tax on the rental return - or can anyone tell me if any tax reliefs are available.
I'm in Ireland too, and am wondering whether you got to the bottom of this issue of not being able to allow interest charges against the rental return?
Just in relation to my original query about lending criteria used by French banks.
I have gone ahead and booked a leaseback property. As I have a low salary I knew questions would be asked when i applied for a mortgage ... and this has proved to be the case. (I am looking for a mortgage of 70% of purchase price net of tva refund)
Well, one bank has come back to offer me a 107% mortgage! ... but asked me to invest my own payment of 30% of the price in a life assurance account with a guaranteed 4.5% return per annum ... but it will be signed over to the bank as security on the loan for the duration of the mortgage.
Has anyone else ever heard of such an arrangement ?
- Kinalea4
Hi Kinalea
yes some of my clients have also gone for similar deals. Expect to pay 0.2% above what you would pay for a straight repayment mortgage , the broker i know does a simialr interest only deal so it maybe that one you have been offered. The money is actually invested in fairly safe govt bonds (well 70% is) and 30% of it dabbles on the stock market - in fact last year my broker said the stock market gained in value by 24%
check the rate above euribor is no higher than 1.5%
glennborthwick@aol.com
The scheme simply means you will not need a deposit and could also qualify for interest only payments. The deposit to the bank will be assigned and remains in their control until the loan is repaid. Benefits are that you earn interest on your money, not the bank. Down side, the money is tied up. 4.5% is about right, however, 5% can be achieved and with mortgage rates from 3.1% to boot. Although this rate in not certain to be maintained during the life of the loan and could rise or fall, it is the current return. It is generally used as a lumpsum repayment vehicle as well, hence interest only options being available.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><?:NAMESPACE PREFIX = O />
The scheme can have 'no capital risk' to 'adventurous labelled risk. Before you choose how the money in invested take advice. Should be considered if you are an experienced investor.
www.newmortgagefinder.co.uk has experience in dealing with these schemes and can offer assistance to those applying through them.
Good luck with your purchase, Steve
Thanks for that info Glenborthwick and Steve.
I presume when you say that the policy is assigned it is just being used as security and that my lender doesn't have any other access to it other than if I do not make the agreed repayments.
Of course the benefit is the lump sum received on maturity at the end of the mortgage term. It seems I have now invested in 2 schemes (leaseback and life assurance). I'll be rich when I retire, but not before !!