French Leaseback Mortgages are for the purchase of a buy-to-let property where the rental is guaranteed under a leaseback contract.

Your new French leaseback property is a freehold property which you own outright and lease back to a management company.

The return is a guaranteed index-linked income during the leaseback period, which is usually 9 years

Furthermore, with some schemes you can reserve some weeks for your own use or benefit from discounted rental.

Most importantly, the management company takes care of finding rentals and looking after your property.

It is quite common for a French resident to fix their mortgage payments for 20 or 25 years and to see that loan through to the end without ever remortgaging.

As a result, overseas clients are also utilising this great long term value in French ‘Leaseback’ mortgages.

Stable lending in France means that 85% loan-to-value is still achievable from a range of banks, for both residents of France and non-residents, though other lending criteria may apply (such as making loans only available to homeowners or those with a certain level of savings, with minimum income criteria also prevalent).

The bank will take a charge on the prospective leaseback property the details of which will be outlined in the loan offer.

The loan will generally be a non-recourse loan : meaning that in case of default the bank will only take the property as security and not pursue payment of the debt from other assets.

This is one of the reasons the banks are so strict when asking for evidence of income and assets.

The level of finance available to you in France will depend on your financial situation – and also the bank’s underwriting criteria for the particular development you are considering.

Some banks will set their level of funding for leasebacks at 80% of the purchase price, excluding the VAT.

If the leaseback development is backed by one of the top management companies, you will find 100% finance of the purchase price (excluding VAT) available on a range of products, though for interest only mortgages only short term deals are currently on offer.

If we find you a product like this, you will have to move quickly to secure a unit if your strategy is to put down as little money as possible.

** Banks will apply a quota to the development so the product may not be available for very long.

If we take as an example an 600 unit leaseback development, you might find that one banking group might only finance 60 units at 100% loan-to-value, the rest being financed at a lower loan-to-value or perhaps not at all. Enquire within so we can check what bank is financing which development.

French mortgages for leaseback properties are now available for up to 85% of the purchase price excluding purchase taxes Notaire fees)

You may be eligible to reclaim back the Sales Added Tax (TVA) on the new build

French banks are keen to finance leaseback properties and there are many reasons why getting a mortgage in France may be the right solution for you.

French mortgage interest rates are generally 1-3% below the UK/USA equivalent, so it may be cheaper to borrow the money in France.

On a leaseback scheme, you may be able to write off the mortgage interest charge as a business expense.

Also, it is generally accepted that it is safer to have your exchange rate risk based on the monthly mortgage payment of the value of the entire property.

In addition, if applicable to your circumstances, if you receive rental income in Euros it makes sense to have a loan that is also paid in Euros which also lessens exchange rate risk.

By taking out a mortgage in France, you will also have to pay mortgage registration tax which varies depending on the loan amount.

As a rule of thumb it will be 1.5% for a new build property and perhaps only 0.75% or less for an existing property using a “PPD – Privilège de Prêteur de Deniers”.

French banks will charge up to 1% as a fee to set up the loan though generally the amount will be lower than this.

ICE Finance charges a fee as specialists which will be payable on acceptance of your mortgage offer. Enquire within.

The first step is to speak with a professional French mortgage broker like ICE Finance who will ask a few important questions to establish your eligibility with a number of different banks.

Initially we will want to understand your existing debt to income ratio. This is calculated by dividing your outgoings for debt payments by your gross income and should not exceed 33%.

Request a pre-approval decision now and let us work out how much you could borrow.

French mortgage products for new build off-plan properties (Leaseback) are designed to maximise security for both the borrower and the bank.

Therefore the majority of loans in the French mortgage market will be on a long term fixed rate or a capped variable rate.

Consult our dedicated webpage on the different types of mortgage products available here in France.

Click here to view the latest interest rates available for overseas clients, be the mortgage in Euros, Swiss Francs or US Dollars.

Following the changes in the mortgage application process of certain EU countries, obtaining a mortgage in France is no longer harder to do than in neighbouring countries such as the UK.

Of course, the French are still very protective over the financial markets, including those relating to French second home mortgages products but in many ways this is why it is possible to source such favourable rates over such long periods.

This security means however that non-status lending and self-certification mortgages are not available.

Each of the French banks has a slightly different underwriting criteria and so requires a slightly different set of supporting documents.

Some banks may also require documents to be certified by a finance or legal professional – we will advise accordingly based upon your own personal circumstances and French property project.