French Mortgages...

[Petrified]

hello again..thank you all so much for your helpful advice..i have another question.....Would any of you kind people know of a french bank or mortgage company that do mortgages on a non proof of income basis..i'll wait awhile until you all stop laughing and look forward to your comments

many thanks again ...petrified

[Quillan]

Well I didn't laugh, fair do's your asking the right questions before you get to France and obviously doing your homework from every angle.

The answer I believe will be no. However, and more to the point, if you have £90k, thats around 121,000€ from which you are going to buy, renovate, kit out and run a B&B to support a family. A suitable property will cost you all your money for the basic 4 walls and possibly a roof. The money you want to borrow would then have to be put in to the renovation. All the time you are renovating you are not earning so how do you pay the morgage?

Ian has mentioned the books he is in. Being in a book does not bring instant reservations because people tend to buy these books (AA, Alistaire Sawday etc) and keep them for three or four years so it can be a year or two before anybody comes via that route. You can't just hang a sign up for B&B and wait for people to turn up. Even a website takes months to get registered with search engines and then it's even longer to get to the top of the listings. We stared ours 6 month before we even signed the final contract, it had no pictures other than the outside but by the time we had knocked the place about and opened the doors the website was at least getting some notice. It was not till the second year it really came in to it's own.

So not only have you got to renovate the place PDQ you need to get advertising sorted etc, etc and a morgage on a property with no income in a business were only those with minimum outgoings (i.e. no mortgage or loans) can just about keep their heads above water and thats with 4 or 5 rooms.

'Old timers' like Ian and Miki have been here a long time and have worked themselves up to were they are now nust as you would do in the UK. When they arrived you could probably buy a wreck for a couple of thousand pounds then renovate. I've only been here 3 years and seen house prices almost double and places to renovate in our area can go for 200,000€ and thats in Ariege where it's cheaper but then who wants to spend 3 months of a year with a metre of snow outside their front door (well OK not really but it's not that far off the mark).

I meet a guy who moved the Limoges two years ago and has only just moved from there down to Quillan. He spent two years renovating a house and a Gite, finished, packed up and moved. Why, because he said it was the dullest, dampest part of France he had ever stayed in. Even the birds get depressed there (his words not mine as I have never been there).

So having read all the three threads and the replies and your financial details that you have posted I would say in all fairness don't do it, don't try for a loan, don't come to France and don't try and do a B&B. Give yourselves a few more years in the UK, save some more money etc, then and only then have another look.

Believe me I am so sorry about the last paragraph and I really don't want to sound dispassionate, rude, a know it all or anything like that, all I am trying to do is give you what I consider realistic advice in your current circumstances. If you take my advice or not I wish you all the best in the world.

[mascamps.com]

Quillan isn't quite correct about the mortgages.

It is true that there aren't any "non status" mortgages as there are in the UK. Non-status mortgages are mainly used by the self-employed who can go along to the bank and just say that they earn £100,000 a year or whatever without having to prove it. If you don't actually earn that though and are just trying it on to get a higher income multiple than you are normally eligible, you'd just be being crazy.

However, you can get business loans without proof of income from, I think, most if not all of the banks here. What's required is a properly costed out business plan and from what Quillan was saying about your other posts, I would encourage you to do a business plan whether or not you want a mortage. It helps you clarify in your own mind if your project is really viable. This route completely avoids the French law which states that your mortgage payments can't be more than 30% of your income as it doesn't apply to commercial loans.

If you do go down the commercial loan route, err on the pessimistic side as regards occupancy and the like. It's much better to be pleasantly surprised when things turn out better than you expected.

Getting into books adds about 18 months to your leadtime at minimum. To be in something like Petit Futé, you must have the ad with them by June of this year to get in their next years edition.

You can get almost instant bookings from websites these days. Quillan is correct about it taking ages for your own website to get up the rankings and indeed it's worse than he says because Google puts a delay of up to 6 months before you get anywhere with it. However, you can and will get bookings almost immediately you get onto some sites because they themselves are already listed: eg my best single site (nope, not telling what it is) produced 7 reservations for me the day after I got on it.

And finishing on a positive note, there are still bargains to be had. I'm sitting in a former bargain right now because I was lucky enough to be here at just the right time to get this place about 30% under it's real value at the time. You will see places like that and even now when we have the odd browse (I must stop doing that!), we've seen places listed at considerably below what we would pay for them.

 

Arnold

 

[Miki]

A couple of points here,

Getting a mortgage on a B&B is definitely, not the most sensible thing to do. I did tell you that credit in France on some out of the way B&B, is the road to ruin and I stick with that.

If you were buying one of the busiest places on the Northern coast, with a long, long season, a turnover to swoon over, yes OK, look at the figures, look again, do your sums, look again and then perhaps have some credit at the bank.

Unfortunately though, a place like that will cost one a fortune, a few hundred thousand minimum probably a lot more, as ever, you do of course get what you pay for.

Arnold said " And finishing on a positive note, there are still bargains to be had. I'm sitting in a former bargain right now because I was lucky enough to be here at just the right time to get this place about 30% under it's real value at the time. You will see places like that and even now when we have the odd browse (I must stop doing that!), we've seen places listed at considerably below what we would pay for them..."

Bargains are in the eye of the beholder, selling is when you know if you were right but only once you have taken in to consideration, all the heartaches, the huge amount of your time, all the expense and effort in to making a profit from the eventual sale !

As for you being there at "just the right time" then how many others got there before you at the wrong time Arnold

[mascamps.com]

As Miki says, do the sums. You've far too much riding on it to do otherwise as the banks here are quite ruthless if you find out later that you've taken on more than you can afford. What they will essentially do is to auction your place with the reserve set as the amount of the mortgage so if you bought a place for 100.000€ on an 60% mortgage, you could see it sold for 60.000€ and all your own investment wiped out.

Indeed, it's best not to be among the great mass of people who buy places when it isn't the right time. You'll only know that if you've seen a number of places that meet your criteria. I said that this place was 30% underpriced because we had seen almost identical places listed at prices 50% above what we paid. When we looked, we were just lucky to be here the week after it was listed and a number of other people were unlucky - one was ready to buy on the Friday afternoon but we'd the owners committed to us on the Thursday evening. If you can't move quite quickly, you will probably miss the bargains which is another problem.

You should also take the time to sit down and write out just what characteristics your ideal place would have. When you do go looking, it will help you no end to be able to quickly eliminate a place because it doesn't meet all your requirements. Don't make those requirements too specific though or you'll eliminate places that you might love eg we were sure that we wanted to be on the coast but when we sat down and thought about it, we actually wanted to be near water that we could swim in which includes a lot more places. In practice, it was obvious to us that this place was what we wanted when we walked in the door but we'd never have seen it if we'd said that it must be on the coast. Such a specification is very useful for the estate agents too.

Arnold

 

[Cerise]

Hi Petrified

Please don't do it!!! Don't borrow money to try to enter any tourist orientated project.  It's doomed to failure - you have to start paying the money back straight away, and how are you going to do that without an income? 

My house, like Arnold's, was a bargain but we took 18 months to renovate it and had no income at all during that time plus we lived in major discomfort (no heating when it's -10 outside is not that funny).  This was OK for us because we are adult and chose to do so, but I understand you have a family - it really is not fair to do that to them.  Even with our bargain house we still spent more than £90K.

I know 2 families who have tried borrowing.  They are both back in UK living in grotty accommodation and the bank is trying to sell their half finished ruins.

I am not trying to ruin your dreams but if you are really OK as a builder why not buy a small house, register as a builder, work here for a while get used to the life and then perhaps buy a renovation project to fulfil your B & B dream.  Don't forget once it is renovated you still have to furnish and equip it.

Sorry to sound like someone's maiden aunt, but it is better to hear the truth now - however unpalatable - than when you are already here and desperately broke.

Maggi

 

[Ian Hoare<br>All the best<br>Ian<br>La Souvigne Corrèze<br>http:www.souvigne.com]

Hi again,

Oh dear. I'm going to be peeing in the pickles again.

Forget it. There's no way in the world you're going to be able to run a B&B on a bank loan.

Let me explain, logically. Where are these houses coming from? From people who can't work out how to make them pay for themselves. The French aren't dumb!! If THEY could borrow money to do up their places and run them as B&Bs, they would, or enough would to cut into the house market very seriously.

Miki has said it, Quillan has said it and even Arnold in a contradictory kind of way has said it. To have ANY chance, you need to be in a top tourist area. Limoges isn't. If you were on the Dordogne at La Roque Gageac, perhaps you might pick up 6 months of near 100% bookings and another 2 or 3 at 50%. But believe me you AIN'T going to find a house big enough to restore for B&B there at the price, nor anything near it. Those days are gone.

PLEASE, please don't do a Webbie. (A guy we know who spent his last £250k buying and doing up a place, then having to sell it to pay his bills and who is now living in penury here).

As to the facts, if you know the right people no doubt you could get a loan secured on your house. Hypothèque (or mortgage). Unless you were quite extraordinarily lucky, and extraordinarily economical and extra-ordinarily hard working, you would end up without a sou, having the bank sell your property to pay your debts.

As Cerise and others have said, you'd be better off either saving more in the UK, or seeing if you can get established as a builder here and THEN seeing if you can find a place. Prices are mad here at the moment.

We bought our B&B house for FF104k, did it up for FF138k ourselves over a year at 12 hours a day. It has been a wonderful investment for us. But we only got that house because we were next door, the old lady liked us, it had no land and there was no one else to buy it. And with Brits paying £40-50k for boring wrecks nowadays in this area, there simply isn't the margin in it anymore.

[mascamps.com]

I was thinking along the lines of Cerise's suggestion this afternoon. Definitely a small house, money in the bank and building work to keep you going is the way to go.

The biggest downside is if mid-restoration of your ruin, you run out of money. Definitely the worst case scenario I think. The bank is only going to get peanuts for what you have to leave and you're wiped out financially.

 

Arnold