French bridging loans work in a
different way to UK ones, and are nowhere near as
expensive. They are treated as a normal mortgage, and
can be included as a clause suspensif in a compromis de
vente. If your UK property is sold before the loan is
required, you are not committed to take up the loan.
- Loan to value percentage varies, usually between
70% - 100% according to client's circumstances, can be
over 100% to cover work to be carried out. Each case
is considered based on client's financial status.
- Mortgage fee to pay which is a percentage of the
loan.
- Security is on the French property, it cannot be
secured against a UK property.
- The loan can be for up to 2 years - no penalty for
early redemption.
- Rate is not loaded as in the UK, but at normal
mortgage rate, fixed for the duration of the
loan.
- Monies are released directly to the notaire for
the final signing.
- Loan can be repaid on a monthly basis (as in UK,
and means you have two mortgage payments to make each
month) OR it can be rolled up and paid off in a lump
sum when the UK property sells. (Obviously there has
to be enough equity in the property to repay any UK
borrowing as well as the French bridge)
- There are no penalties for rolling up the loan for
2 years.
- Application is made at the time of drawing up the
compromis de vente, and payslips, bank statements etc,
are required.
- Can be included as a clause suspensif in a
compromis de vente.
- If the UK property sells before you take up the
loan, you are not committed to take it
up.
Comments from a
UK client:
'I have to say that the French
bridging finance option was a no brainer as far as we
were concerned. It is significantly cheaper than the UK
and, even more attractively, we have an option where we
only pay a monthly insurance premium for the duration of
the loan and only pay back the loan plus the interest
for the period we have had it when we want to redeem the
loan. The rate of interest we are paying is such that we
can invest the money we would be paying back here in the
UK and make money on it!!! I really cannot
understand anyone shying away from this option. It makes
great sense to us!
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