17 July 2019 - French Mortgage News | International Mortgage News | Partners News |

News Flash: Another French bank reduces their French mortgage rates!

As if the benefits of a French Mortgage aren’t good enough already, another French bank has lowered their French mortgage rates even further!

You can now get a non-resident mortgage with a variable rate of 0.87%!!

However, as a borrower, it is important that you are not swept up by the headline rates published by the banks. Unlike in the UK, there isn’t an obligation for them to publish the APRC (the actual rate, once all costs associated with the mortgage are taken into consideration). They also don’t always make it clear, what are the mandatory conditions of these products; conditions that can add a considerable amount to your monthly payments.

Firstly, make sure you check the term of the mortgage – in the above example, that rate is only available for a 5 year term on a capital repayment basis (not interest-only). Fixed rates for a 20 year term typically start at 1% at an 85% LTV (albeit with expensive mandatory conditions and requirement to place other assets with the bank).

But let’s look at this “attractive” 1% headline rate.

Firstly, if you want this product you have to take out the bank’s own life Insurance product for the term of the mortgage (regardless if you already have UK or French cover in place). Based on a healthy person, their insurance product will be 0.46% of the loan amount/year – which based on a €250k loan will increase your monthly mortgage payment from €1,150 to €1,245 (which is essentially the same monthly payment if your rate was 1.8%).

Secondly, this bank will also require you to place between 20-25% of the loan amount (so up to €62,500) with the bank. This has to be in Euros, for the lifetime of the loan. So whilst they are offering this product at an 85% LTV, in reality, you have to pay your 15% and then place a further 25% cash with the bank. So you are still having to ‘pay’ (and convert in Euros) 40% of the loan amount – making the LTV more like 60%.

If you would like a “no strings” attached fixed rate capital repayment French mortgage for 20 years at the maximum LTV of 85%, you are looking at a rate of 2.7%. Which is still very low, as remember – this rate is fixed for the lifetime of the loan! There is no life insurance requirement nor a need to place any assets with the bank.

To be sure you get the best deal for you and your personal circumstances and future plans, please contact one of our Consultants who can talk you through all of the suitable products available to non-residents or fill in our online quote form here.

For more information on the life insurance requirement when taking out a French mortgage – read our article here.

 

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