There are a number of different ways to buy a ski property in France including a mortgage, buying leaseback or off-plan. We take a look at the advantages and disadvantages
French lenders look very favourably upon the prospect of providing financing for properties in the French Alps. The outstanding infrastructure of the area and its popularity with tourists mean that the property market there is regarded as a safe bet, with the value of real estate tending to increase over time. The strength of the property market in the Alps means that 85% financing should be readily available, although think carefully whether you want a fixed-rate, fixed-term mortgage (often very attractive rates but there may be penalties if you make overpayments) or a variable mortgage (often less favourable and fluctuating rates but you can pay off chunks of the mortgage earlier if you prefer).
There are several advantages to financing your ski property purchase with a mortgage. First, this could reduce your exposure to wealth tax which is charged on net assets, and second it could reduce your income tax bill if you earn an income renting the property.
2. Buy a leaseback property
If you are looking to get a regular income from your ski property and are happy to only use it a few weeks a year then buying a property via the leaseback scheme might be a good option. The buyer purchases a freehold furnished property which is then leased back to a management company for a set period. Buyers are entitled to a VAT refund on the purchase price and a guaranteed rental income and get a set number of weeks to use the property themselves each year.
In recent years French mortgage providers have become increasingly cautious about providing mortgages to finance the purchase of leaseback properties in France and will study the individual project carefully before confirming a mortgage. Generally they will finance purchases from leading developers and management companies. Lenders are also cautious about the projected income and won’t include this in their mortgage calculations. They might only offer 70-80% financing instead of the 85% you get with a standard mortgage.
3. Buy an off-plan new-build property
Buying off-plan is a common option in the Alps. Given the area’s popularity there are a number of new-build developments being constructed and they are often in the popular resorts. Buying off-plan can be cheaper, notaire and agency fees are often less on new-build properties than an old property and there are likely to be less repair and maintenance costs. You might also be able to choose design features for your new property. However, buying off-plan is more of a risk as you can’t see the property before you buy it and so there is the possibility it won’t be finished in the way you expect or when you have been promised.
As a result of this increased risk lenders are more cautious when offering mortgages for off-plan purchases. They will thoroughly check the reliability of the development project and might only offer 70-80% financing instead of the 85% you get with a standard mortgage.
Find out more: 4 reasons to buy a new-build property in France
Simon Smallwood, joint managing director of mortgage broker International Private Finance