Focus on Finance in France
Relaxing in the Garden at Palais Royal
August 7, 2008
Bonjour French Property Insider Subscriber,
I’m writing you today poolside from the U.S.’s most French-rooted city — New Orleans. It’s Hot with a Capital H as is to be expected for the month of August. Tomorrow I return to "Gay Paree," "Paris Plage" and a city of tourists, not residents.
Today’s issue of FPI is focused on Finance in France…how to get the loan you need to purchase your French property. It’s easy and definitely doable. We don’t have a single client who has been denied financing — but of course, the amount of the loan available may change the ability to purchase the property they dream of.
Financing your property is the best way to beat the current rate of exchange and there are numerous other reasons that financing is a smart move in today’s economic environment. You can read more about all this in today’s issue as well as on our Web site, French Property Loan at http://www.adrianleeds.com/frenchproperty/loan. To begin your research on financing, be sure to contact our Mortgage Manager, John Rule, at mailto:[email protected] or any of the lenders via the Web site at http://www.adrianleeds.com/frenchproperty/loan/lenders.html
Be sure to read the articles from our associate publications and take a look at the HOT properties to whet your appetite — those in Paris with garden views, where you can have a bit of country in the city and enjoy greenery all year round.
When I’m back in Paris, we’ll post the information about our next Living and Investing in France Real Estate Conference scheduled for October 11-12 in Paris. For now, visit http://www.adrianleeds.com/frenchproperty/conference or email Schuyler Hoffman at mailto:[email protected]
Editor, French Property Insider
Email: [email protected]
P.S. If you’re planning on purchasing property in France, then the Fall is a perfect time to start your search. We can be reached by phone at a U.S. number that rings in France: 310-427-7589. Feel free to call with your questions.
Volume VI, Issue 32, August 7, 2008
In this issue:
* Financing Your French Property
* Making an Offer and the Clause Suspensive
* New Name for UCB-IB
* French Living au Bord du Lac
* Tips on Making the Move to France
* Sarko on the French Riviera
* French Property Fractional Offerings
* Upcoming Living and Investing in France Real Estate Conference
* FPI Property Consultation, Search and Relocation Solutions
* Today’s Currency Update from Moneycorp
* Next Parler Paris Après-Midi: September 9, 2008
* Hot Property Picks: Seeing Green
* Leasebacks: Residence le Tessa, France, French Alps, Les Deux Alpes
* Managing Your FPI Subscription
* Classified Advertising: Parler Paris Apartments — Le Pinot Noir
How to Get Financing in France
By Adrian Leeds
Who are the lenders?
Many lending institutions in France now specialize in mortgages designed specifically for non-residents. We work with a number of these lenders: BPI (Banque Patrimoine et Immobilier), BNP Paribas International Buyers (formerly UCB), Crédit Foncier, GE Money Bank, Barclays Bank, Micos Banca and HSBC.
What qualifies you for a loan?
1. Income. Loans are income based. You may borrow up to one-third of your disposable income. Rental revenues may be considered as income.
Consumer debt (credit card balances), taxes and insurance premiums ARE NOT d
educted from disposable in
come. Car payments, other mortgages and other debts ARE deducted from disposable income.
The term of the mortgage, depending on the lender, often may not exceed approximately 70 years of your age. This is directly tied to a sometimes mandatory life insurance policy which secures the loan.
Why is life insurance often mandatory?
Many of the lenders require that all property be secured by a life insurance policy and in the event of the borrower’s death, the property is free and clear for inheritance purposes.
What if I already hold a life insurance policy?
The policy must apply specifically to the mortgaged property. Normally, the policy is provided by the lender’s associated insurance company, but can be provided by an outside insurer. The borrower must complete a medical questionnaire and often undergo an exam to qualify for the insurance and therefore the loan.
How much can I borrow?
Traditionally up to 80% of the purchase price of the property, sometimes up to 90% and in some cases, 100%, with terms up to 40 years.
Will the mortgage cover Notaire fees?
No, however, with some recently developed loan "schemes," all fees may be financed.
Will the mortgage cover agency fees?
Yes, as long as the fees are included in the purchase price of the property.
Will the mortgage cover renovation?
Yes, under conditions: the lender will provide up to 80% (or in some cases 90% and 100%) of the appraised value of the property including the renovation costs.
What types of loans are available?
1. Fixed rate
3. Interest Only
4. Combination Loans
Do all lenders offer the same products?
No, each lender offers a variety of different loan products. The following are explanations of each:
"Plain vanilla" variable rate: the rate usually based on 3 month Euribor (currently 4.97%) plus a bank margin (usually 1.2% to 1.4%) = 6.17% to 6.37%. The loan provides maximum flexibility to 1) repay all or part of the loan without penalty, 2) to fix the rate at any time. When rates rise or fall, the monthly payment stays the same and a corresponding adjustment is made to the term of the loan.
Fixed rate (for the entire term of the loan): the loan cannot change to a variable without a penalty nor prepay without penalty (3% of the loan balance). Rates are currently between 5.5% to 5.75% depending on the term. We are now in the unusual situation of an inverted yield curve, where long term rates are lower than short term rates. This inversion does not usually last long, so short term rates could come down, or long term rates could come up, to re-establish a normally upward sloping yield curve (the longer the period, from 3 months to 20 years, the higher the rate).
Interest only loans: are use for the highest leverage to property values, requiring a stronger than average financial position, with slightly higher rates, and there are limits somewhat to the amount that can be financed.
Combination products: these are loans with fixed rates for 1, 2, 3 or 5 years and then turn into variable rate loans. Rates can be as low as 4.90% up to 5.65% for 1 to 5 year fixed rate periods.
Special features: 12 or 24 month partial or total payment deferrals are available with many of the products offered. These features allow time for a rental business to get up and running, if applicable. Deferred amounts are rolled into the loan amount.
Zero Plus Loan Option (only by BPI): this special "scheme" avoids converting currency at the current exchange rate, allows one to finance everything including all fees and requires a 30% of the loan value investment in an interest-bearing account (held by bpi) in U.S. dollars or other currency.
What are the current interest rates?
Euribor (the money market reference rates for the euro) plus margin: 3-month Euribor August 7, 2008: 4.968%
12-month Euribor August 7, 2008: 5.35%
Can I get pre-approved?
Lenders will accept applications prior to purchase of a property, but will provide a “pre-approval in principle” only, estimating the applicant’s borrowing power.
We highly recommend understanding your borrowing power BEFORE visiting properties which may not meet the lending capacity. Also, this information is necessary in constructing the "Clause Suspensive" (loan condition clause) in the "Promesse de Vente." (Scroll down to read further about the "Clause Suspensive.")
Who is held responsible for repayment?
Those on the title deed of the property are held respo
or repayment of the mortgage.
How do I may repayments?
Your payments will be automatically deducted from your French bank account.
Can I deduct the interest portion of the loan on my U.S. tax return?
Yes! We recommend you consult your accountant or tax attorney for advice.
How do I get started?
Contact French Property Loan:
Understanding the "Clause Suspensive"
By John Rule, Mortgage Manager, French Property Loan
The "Clause Suspensive" is a conditional clause in the "Promesse" or "Compromis de Vente" that protects the buyer by effectively making the offer conditional on financing.
The buyer sets three terms:
1) the maximum amount the buyer will request from the lenders
2) the maximum term of loan the buyer will request
3) the maximum interest rate acceptable to the buyer
The buyer can walk away from the purchase with their deposit in hand if one of the terms is not met. The buyer may also do better in terms of the loan that they end up with, but it is best to put minimum acceptable terms in the clause.
Terms must be reasonable to be accepted by the seller. The buyer must apply to at least two banks and have proof that neither bank is willing to provide financing that fits the clause terms, in order to cancel the purchase without penalty. Sellers prefer offers with no Clause Suspensive, naturally, as it reduces a risk to them that the purchase will fall through two or three months down the road. Sellers can often be pacified with a letter from at least one lender, which approves them "in principal" for the amount that they have put in the clause (but the letter is not binding from the bank’s perspective). The buyer must inform the seller of the inability to get financing by the date mentioned in the Promesse or Compromis de Vente in the form of a registered letter by the lenders to satisfy the Clause Suspensive.
UCB-IB Changes Brand Name
UCB has recently changed its brand name to "BNP Paribas International Buyers."
BNP Paribas International Buyers is part of BNP Paribas, one of the largest financial groups in the world with more than 17 years of experience delivering mortgages to non-resident investors in France.
BNP Paribas International Buyers extends its new “2- or 5-year fixed rate” option to its refinancing solutions.
What are your needs?
* Planning some major renovation works for your home in France
* Taking advantage of being a home owner in France to supplement your income
* Searching for a profitable investment in France
* Looking for a lower monthly repayment
* Choosing an Interest Only Mortgage
Interest Rates (on August 4, 2008)
Euribor 3 months : 4.97%
Euribor 12 months : 5.36%
£ 1 = € 1,2625
€ 1 = £ 0,7921
€ 1 = $ 1,5602
For more information, contact:
BNP Paribas International Buyers
5 Avenue Kléber
Tél: +33 (0)1 53 64 31 30
Fax: + 33 (0)1 53 64 31 22
Mobile: +33 (0)6 65 88 23 46
e-mail: mailto:[email protected]
Lakeside French Living
New property development announced at Lake Annecy
Those in search of French Alpine property with year-round appeal should look to Lake Annecy in the Haute-Savoie region, a relatively untapped area with huge property investment potential.
As well as offering a number of first class ski resorts for winter vacations,
the area is also a draw for watersports enthusiast
s from around the world during the spring and summer, making it an excellent investment for buyers looking to go into holiday lettings.
A new development on the east side of Lake Annecy at Veyrier du Lac was announced today by French property specialists MGM Group, representing a golden opportunity for those looking to get on the property ladder in the area.
Les Jardins d’Eos will comprise a new low-rise development of four buildings, each containing seven apartments ranging in size from one to four bedrooms, with two or three bathrooms. Each apartment will come equipped with under-floor heating and an underground private garage and owners will have use of a communal pool.
Apartments will offer panoramic views of the lake, and substantial terraces or balconies from which to enjoy the scenery.
It’s the biggest new development of its type ever undertaken on the shores of Lake Annecy and will occupy a substantial greenfield site of 1.4 hectares.
Construction is scheduled to start in spring next year, and the properties will be available for occupation in 2010. Off-plan prices start at €476,000 for a two bedroom apartment.
Thousands of Brits move to France every year, and millions more dream of joining them, attracted by the warmer climate, rich culture and hugely varied landscape. Countless films and novels have recorded the experiences of the 200,000 British ex-pats living across the Channel, from A Year in Province or A Year in the Merde. If you’ve decided to take the plunge, either to retire or just for a change of pace, here is our guide to moving to France…
To read the entire article visit http://www.timesonline.co.uk/tol/money/reader_guides/article4007950.ece
President Sarkozy and Carla Get Away From It All in the French Riviera
After the whirlwind of state visits and official events which have filled their first six months of married life, Nicolas Sarkozy and Carla Bruni are finally spending some time together out of the spotlight. The French president and his wife are unwinding in the South of France on their first proper break since their February wedding.
The couple began their holiday by soaking up the rays and snorkeling on a rocky outcrop overlooking a sheltered cove at Cap Negre, in the Var region of the French Riviera. Widely recognized as the most peaceful part of the region it’s favored those in search of privacy, and Carla’s family has a villa close by.
Apart from a brief trip to attend the Olympic opening ceremony this Friday, the French premier and his wife will spend the next three weeks dividing their time between the Bruni property and the official presidential summer residence of Fort of Bregancon in the picture perfect village of Bormes-les-Mimosas.
The restored 16th-century town perched on a hilltop overlooking the Mediterranean is a maze of pink-tiled houses and narrow streets lined with the mimosa trees which give it its name.
A fine view of the old quarter can be seen from Saint Francoise de Paule square, while the Musee d’Arts et Histoire – which features works by local landscape painters – makes a great stop-off for those in search of a little culture.
Fractional Property Offerings from French Property Fractional
If you are interested in traditional fractional ownership properties currently offered by our Fractional Ownership partners, see below:
|Paris: LE PETIT TRESOR
|Paris: CHEZ LA TOUR
|Meaux: CHÂTEAU LIVING FRANCE
|Nice: ON THE COURS SALEYA
For more details and pricing information, contact [email protected]
Adrian Leeds, of Parler Paris and French Property Insider and John Howell, The International Law Partnership, Present the…
Living and Investing in France Real Estate Conference
Date: October 11-12, 2008
Location: Paris Chez Jenny
Times: To Be Announced
Registration Fee: To Be Announced
For more information, email [email protected]
TODAY’S CURRENCY UPDATE
Visit the FPI Web site and click on the link on the left panel or click here for Currency Convertor by Moneycorp Global Money Services: http://www.adrianleeds.com/frenchproperty/insider/moneycorpconvertor.html
for up to the minute conversions of all major currencies.
Compare currency values easily and quickly by visiting:
The charts below are updated every ten seconds.
The prices shown are "inter bank" exchange rates and are not the rates that you will be offered by Moneycorp. Your rate will be determined by the amount of currency that you are buying. Please speak with an Moneycorp dealer or your consultant for a live quotation.
Parler Paris Après Midi
Come for a drink and to meet and chat with other readers in Paris…
The next gathering is September 9, 2008, and every second Tuesday of the month.
Note: There is no meeting in August.
HOT PROPERTY PICKS: Seeing Green
Each week French Property Insider features a range of properties which we believe are on the market at the time of writing. These properties are featured in order to give readers a sample of what is currently available and a working example of prices being asked in various regions of France and districts of Paris.
As we are not a real estate agency. These properties do not constitute a sales listing. For those readers seriously interested in finding property in Paris or France, you can retain our services to do the whole thing for you. For more information, visit http://www.adrianleeds.com/frenchproperty/consultation
***Paris, 16th Arrondissement, Studio, approx. 40m²
Near metro Jasmin, large studio on the first floor facing west with a view of a tree filled garden. Equipped kitchen, bathroom, toilet, cellar. A lovely, quiet location near stores.
Asking Price: 319,000€ + 2.5% Finder’s Fee
>***Paris, 11th Arrondissement, Studio, approx 45m²
Near Theatre de la Bastille. On a garden in the heart of the Bastille district, studio with a loft feeling in ambiance and design. Coup de coeur!
Asking Price: 330,000€ + 2.5% Finder’s Fee
***Paris, 17th Arrondissement, 2 rooms, approx. 50m²
Magnificent two room apartment, very bright. Large living room on a garden, bedroom with walk-in closet, bathroom, wood floors, fireplace, double windows, in good condition. Sunny…quiet…superb.
Asking Price: 375,000€ + 2.5% Finder’s Fee
***Paris, 5th Arrondissement, 3 rooms, approx. 55m²
Quartier Val de Grâce, a charming apartment on in a Pierre de Paris building. Living room with an open view on the garden, 2 large bedrooms, fully equipped, separate kitchen, bathroom, toilet, cellar. Wood floors, moldings, fireplace.
Asking Price: 540,000€ + 2.5% Finder’s Fee
LEASEBACK NEWS FROM IMOINVEST
RESIDENCE LE TESSA
France, French Alps, Les Deux Alpes
Studio 20m² to 22m² €90,000 to €105,000
One Bedroom 31m² to 54m² €140,000 to €270,000
Two Bedrooms 60m² €300,000 to €300,000
EXPECTED RENTAL INCOME UP TO: 4.00%
Welcome to France’s best summer and winter ski resort with superb skiing over 220km of slopes for all levels, high altitude slopes and one of the best snow parks in Europe. Area activities include paragliding, golf, hiking, ice climbing and snow shoe walking. This dynamic ski resort has a warm, friendly atmosphere with a lively after-ski scene in numerous bars and restaurants. There are an eclectic range of shops and fantastic facilities including a large sports center, outdoor swimming pool, cinema, ten pin bowling center and skating rink. The resort is less than an hour from Grenoble and is also easily accessible from Lyon, Chambery and Turin airports.
Excellent investment opportunity for this refurbished development that was once a hotel and will now be modified into 39 units ranging from studios to 2 bedroom duplex apartments sleeping 2 to 8 people. The residence is situated on the main strip in Les Deux Alpes, Avenue de Muzelle very close to the entrance of the resort and all of the local amenities. Most of the apartments will come with private balconies and garages and cellars are available to buy. Furniture packages and fully fitted kitchens will be available to purchase, with prices confirmed at the beginning of next year.
These apartments are both freehold and non leaseback, allowing complete flexibility of use and rental. The apartments should rent extremely well both in winter and summer thanks to the high altitude glacier for skiing and all year round activities.
- High altitude for both summer and winter ski
– Paragliding, golf, hiking, ice climbing
– Sport center, outdoor swimming pool nearby
– Easy access from Grenoble, Lyon, Chambery and Turin
SEEKING A MORTGAGE IN FRANCE?
When you make a purchase as import
ant as a piece of real esta
te in a foreign country, you want to know that you can trust the people you are dealing with. Adrian Leeds has developed a network of professionals that meet only the highest of standards. With the expertise and experience of Adrian and her team, you can depend on getting the best advice and support to feel completely confident that you are making an informed investment decision.
Managing Your French Property Insider Subscription is Easy!
We receive many emails from French Property Insider Subscribers who want to change their email address, or update personal information. But did you know that you can make these changes yourself?
2. Click on "Manage Subscription." You’ll find it under the "Subscribers Only" section in the sidebar.
3. Enter your username and password.
4. On the Welcome Page, go to "Manage Your Account" and click on "Change Password/Edit Profile"
5. Once you’ve made the changes, scroll down to the bottom of the page and click on "Save Profile."
Of course, we’re always happy to help, so if you do need assistance, send an email to [email protected]
We wanted better guides.
So we wrote them.
Insider Paris Guides are written for people who love the City of Light. You’ll get a Paris insider perspective on Restaurants… Making a Life… Black Culture… Expat Writers…and the newest guide, Practical Paris!
French Property Insider subscribers receive a discount of 10% off any guide and up to 25% off the entire purchase (if two or more guides are purchased at the same time). Here’s how it works:
1. Click on special Web link we give you just for FPI subscribers.
2. Then order one or more guide(s) and use the promotion
code "ED762." This promotion code gives you 10% off your total
3. If you order two or more guides, then an additional 15% will be
taken off automatically. There is no promotion code needed.
Here is the special "coupon" Web link just for you:
THINGS YOU NEED TO KNOW
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HELPFUL CONVERSIONS FOR REAL ESTATE
1 square meter = 10.7639104 square feet
1 hectare = 2.4710538 acres
For more conversions, refer to: http://www.onlineconversion.com/
Welcome to your home in Paris. Home is how you will feel in a private apartment in Paris that has the "seal of approval" from Parler Paris Apartments and me, Adrian Leeds.
Parler Paris Apartments offers high quality accommodations to make your stay in the City of Light as enjo
yable and memorable
as possible. We at Parler Paris know each and every apartment owner or manager personally, and stand behind the quality of those we represent. We understand your needs and desires, all the small details that make a rental apartment a warm and welcoming home – and a much better alternative to an impersonal hotel!
Parler Paris Apartments is administered and serviced by the same great team as Parler Paris, French Property Insider and French Property Consultation. You can trust that Parler Paris Apartments and all those with whom it is associated will do their best for your 100% guaranteed satisfaction.
Le Pinot Noir
Rue Debelleyme, 3rd Arrondissement
One-Bedroom, Sleeps up to 4
"Le Pinot Noir" one-bedroom luxury apartment is a wine connoisseur’s dream and everyone’s dream. Located just steps off the lively rue de Bretagne, but facing the quiet little street of rue Debelleyme across the street from one of Paris’ finest restaurants, Le Pamphlet, it affords views of rue de Bretagne and the adjacent Marais streets from close to rooftop level.
Le Pinot Noir is completely equipped for pure luxury. Newly renovated, it is complete with a queen size bed that converts to twin beds when desired, a comfortable and easy-to-open sofa bed for additional guests, a washer/dryer combination, microwave, four-burner ceramic stove, full size over, large refrigerator with separate freezer, high speed Internet, flat screen TV, DVD player, stereo, and free(!) long distance phone service
For more details and photos visit http://www.adrianleeds.com/parlerparis/apartments/rentals/pinot_noir.html
To book, email [email protected]
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