Types of French Mortgages for Non-Resident Purchasers
The interest rate is fixed at the starting of the loan for the duration of mortgage period of 5 to 25 years. The positive side is that the borrower knows the amount of monthly expenses he has to bear on his french mortgage. However on the negative side, the interest rates are higher than the variable rate loan which could be obtained in the same market place and it carries a penalty payment of 3% of the capital re-imbursed whether the borrower chooses to pay off his load in all or part before the end of the loan period.
French Capital and Interest Variable Rate Loans
They can be obtained at a cheaper rate of interest than the fixed rate schemes and can be generally cleared in all or part before the end of the loan period without any penalty. However some variable rate loans in France do carry early redemption penalties. Instead of these types of loans with penalty, people prefer Capped rate mortgages where the amount of interest rate can move up or down, capped at either 1% or 2% margin giving stability to payments.
French Fixed Payment Loans
In these types of loans the monthly payment is fixed at the outset of the loan though the interest rate varies. In case the interest rate moves up or down, the bank increases or decreases the term of the mortgage instead of changing the monthly payment. There is no penalty on early redemption in part or all.
French Interest Only Loan
It is a hybrid arrangement of loan where the interest may be limited to the initial 5 years followed by a capital and interest period of 20 years on a standard 25 year mortgage (or 10 years interest followed by 15 years of capital and interest repayment).
French Equity Release Schemes
It is possible to transact french equity release mortgages for any purpose with a no. of French Banks up to 80% of the value of the property.
French Leaseback Mortgages
A real leaseback scheme in France or “Credit Bail” is development if properties in a complex, the letting out of which is managed by a Professional management company set up to manage whole complex at the time it is built.
The properties are generally let out over a 9 year period with a limit of how much time the owner may use the property for his own use for not more than 4 weeks a year. The rental income is usually guaranteed for 9 years period at the outset of the value of the property purchased.
French Euroswitch Mortgages
It is for the borrowers who have an unencumbered property in France whilst paying a mortgage on their own property at home at a more costly rate of interest than they could obtain in France.
Other types of loans include Bridging Loans in France and French Land Purchase Loans to buy and build houses.
