CLV FINANCE is an independent mortgage advisor and specialises in organising French mortgages for non French residents.
We have developed tailor made solutions to suit all our customers' needs. We are here to guide you all the way and provide you with the best deal available.
The CLV FINANCE mortgage guide includes everything you would need to know before applying for a mortgage in France.
Your contact is :
Nicolas Hamon
info@clvfinance.com
Tel : 0033 240 157 485
Fax : 0033 240 157 495
Mortgage types
Most of the mortgages available are classic repayment mortgages with monthly payments of capital and interest being directly debited from a French bank account. The amount of interest is calculated against the reducing monthly capital balance. This means that during the loan term the balance of capital owed reduces to zero. There are two basic methods of charging interest: fixed and variable rates, the latter including a wide rage of schemes.
The fixed interest rate mortgage :
The rate charged remains the same throughout the term of the loan.
Advantages :
- The amount of your monthly repayment remains fixed for the duration of the loan
- Budgeting is made simple. If you are planning to let out the property, a fixed interest rate makes forward business planning easier with less need for contingency plans against rising payments due to rising interest rates.
Disadvantages :
- Since interest rates are fixed, profit cannot be made from any fall in rates.
- An early redemption penalty is applicable, generally 3% of the remaining capital due.
The variable interest rate mortgages :
They are based on adding a margin to an interest rate index like the Euribor* index.
The advantage of variable rates is that they are the lowest on the market. They are typically fixed for the first 3 months to one year then go up or down as the market index moves. The interest rate increase can be capped or limited to a percent of inflation. The monthly payment amount can also be fixed. If interest rates go up, the term of the loan is extended rather than raising the monthly payment. Most products give you the option to convert to a fixed interest rate at any time.
* EURIBOR stands for the Euro Inter Bank Offered Rate. This is the rate at which European banks can borrow from each other for a set time period, 3, 6 or 12 months.
Advantages :
- In the vast majority of cases, no early repayment penalty
- If interest rates fall, in certain cases it is possible for the loan to naturally be repaid faster.
Disadvantages :
- There remains the possibility (in certain cases) of an early redemption penalty.
- Less stable repayment schedule.
- Possible losses from rising interest rates, (limited in the case of a cap mortgage).
Interest only mortgages : you pay only the interest expense for a period, and then you either repay the amount you borrowed in full or switch to an amortised loan.
The advantage of interest only loans is that you conserve your ability to spend or make other investments each month. For example, you can put the money you save into another investment that generates a higher rate of return than your interest rate on the loan. An interest only loan also makes sense if you expect the value of your home to rise substantially over time and you plan to sell before you would have paid off the loan in full.