Home Loan and Renovation LoanConstruction financing and renovation loans
Looking at real estate in France, it is often the businesses where the new house is in need of renovation that fall most apart. If you are interested in the concept of such a renovation scheme, let us take a brief look at the most important aspects to consider when deciding to obtain financing with a francophone mortgages.
When looking for finance in France, remember, as always, that financial intermediaries in France are often the only credit institutes that offer mortgages on real estate in France. They will not, however, finance a building that they consider unsalvageable, i.e. largely without power, hot and cold tap running hot and cold, window, door or shelter.
In order to obtain the francophone mortage, the banks will ask you to show that you will be carrying out work to make the real estate inhabitable. As part of the loan request, the banks are provided with official estimations for all renovation work. Quotations must come from certified clients whose insurances are also required as part of the procedure.
It is an important point that sometimes does not allow UK purchasers - UK creditors - to do the renovation themselves or hire UK developers of their own choosing. In terms of mortgages per se, most creditors will remain rigid about a maximal Loan-to-Value (LTV) of 80% or 85%.
These figures refer to the overall budget of your projects - i.e. the purchasing amount plus all renovation work. In addition, the EIB will conduct an investigation to determine an estimate of the ultimate value of the real estate after completion of all works. Here, too, the LTV limit is applied so that the ultimate loan amount may not surpass 80% or 85% of this estimate.
Since you are approaching the conclusion of your sale, the mortgages will not be immediately cleared once your new home is underwritten. Instead, the deposit is your total amount of money (the "deposit") and the necessary resources to make the transaction itself. At this point in time, the EIB will not make any resources available in connection with the renovation; these resources will only be dispatched once the work itself has been concluded.
Once the work has been completed, the client's bills should be passed on to the banks, which will refund them directly. Therefore, you should verify whether the institution is charging a commitment fee, which would lead to you having to pay interest on unused renovation funding. You will have noticed that it is not easy to arrange a renovation home loan in France.
Like always, a serious, neutral franc brokers can match the markets on your account and give you advice on all issues that have not been fully investigated here.