03 April 2019 - French Mortgage News | International Mortgage News | Partners News |
Helping clients’ make the most of their pension/tax-free lump sum with a French Mortgage
Raising finance using retirement income is tricky in the UK, and divesting your pension to buy property greatly inflates your income tax liability. But we were able to help our client, a retired GP, with his French property purchase by securing him an interest-only Euro mortgage at a 75% LTV, fixed at 2.20% all based on his retirement income, without the need to sell his UK residence or divest his pension
Our client, a retired GP, wanted to buy in France. He had the means to buy in cash but realised a French mortgage would have a number of benefits:
- It mitigated the exchange rate by lowering the amount they needed to transfer in Euros from GBP
- They didn’t need to sell or raise finance on their UK house, which they wished to keep for their university-aged children (and raising finance in the UK based on retirement income would have been tricky)
- It reduced the amount they needed to divest from the pension fund, thus ensuring that he did not go over the tax-free threshold and ensuring it work hard for them at an expected return of 5%
We were able to obtain a French mortgage at a 75% LTV, based on our client’s retirement income.
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- Interest-only product which can be repaid at any time without incurring any ERC. This allows the client to decide when they are ready to sell their UK home, and hopefully benefit from a stronger GBP
- Rate of 2.25% fixed for 7 years, then 3.2% capped variable for the following 7 years
- We negotiated a waiver on the “mandatory life insurance” requirement, which considering the client’s age would have added a considerable sum to their monthly outgoings.