Using a Mortgage to buy property in France
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Some people can finance their move to France from their own savings and investments, and from the proceeds of a house sale. Not all are so lucky, So the question of mortgages, best financing method and best mortgage rates arises.
Read more about the actual details of Mortgages in France
In reality, we have already seen that a gite complex can support a family, in principle, but isn't going to make you rich. So is it possible to also have a mortgage?
It depends on the size of the mortgage and the interest rate that you pay. A mortgage that forms a large part of the cost of the property will simply not be affordable. But a small mortgage to renovate an outbuilding into a gite may be more practical, where the return on investment can be calculated reasonably accurately.
Interest rates in the UK and in France have ben low for quite some time now, and it is quite common to be able to fix a loan interest rate in advance for the length of the mortgage. This helps remove a significant part of the risk.
Mortgages in the UK are often 'interest only' mortgages to be paid over 25 years or more. In France most mortgages are repayment mortgages over a 15 year life. Hence the monthly repayment cost is much higher.
It will not be easy to get a mortgage in France once you are living there with no demonstrable income record. If one of you continues to work in the UK it will be easier. Borrowing requirements are much stricter in France and evidence is needed of your ability to repay the loan.
Having said all that, many owners in France have a mortgage on their property. Some are provided by French banks, others by leading UK 'French lenders'. You will need to look around for the best mortgage rates available
Sometimes there are advantages in having a mortgage even if you also have the ready funds available - tax reasons, financial planning reasons, cashflow reasons etc. This can become complicated so you will need to talk to a qualified person.
As an example, we have an old un-converted barn at our property, that could be converted to two gites, at a cost of perhaps £100,000. Income generated might be £12,000 per year, and a mortgage might cost £8,000 per year. So all things being equal, we should go ahead and convert it. That would make financial sense, because we have already established income to meet our 'basic needs' with unmortgaged rental properties. In fact we are not going to, for other reasons, but if I was sensible I would discuss the actual costs with the bank and then make a decision based on the facts.
Conclusion
Yes it can work to pay with a mortgage, but only if the loan size is small; or one of you is still in paid employment; or the loan is for a specific project where the income will exceed the loan cost. You can see some of the societies offering mortgages in france in these listings.