A question.......................

[Bugsy]

I was asked this the other day and don't know the answer, can anyone advise please.

An individual lives and owns a house in france (no mortgage). He wants to sell the house and have a 'new-build' house built. With insufficient funds to do this without the proceeds from his existing house and the new build requiring land purchase and stage payments, how does one normally go about funding this in france?

Gary.

[Iceni]

Sell existing house and rent while new build is being done. Or is that too sensible for the 21st century?

John

 

[Benjamin]

This is not the definitive answer but a rough guide for your questioner because I don't have any first hand knowledge.

The easiest solution is first to sell their property and then rent, but presumably they've already thought of that.

The method some friends are currently using is to go to "the bank" who will lend against the existing property for a period of up to two years (although what happens after then I have no idea). The plan being that their house sells after the new one is completed and before the two years are up.

French interest rates, for what we English would refer to as bridging loans, are much lower and can sometimes be rolled up on to the loan and then capital and interest are all paid up when their current house sells. This obviously may vary from bank to bank. I also wouldn't expect any bank to fund the project 100% without some funding by the people asking the question.

Hope this start the ball rolling.

Edit: my posting crossed with Iceni's.

[Bugsy]

Thanks B, I should have said that this is an elderly couple looking to downsize. The thought of moving into rented property fills them with dread (I think its the thought of packing up all their belongings twice !)

I just didn't know if the bridging loan scenerio was in use here as an option.

Thanks...........

[breizh]

Bridge loans seem common practice in France. We had a similar situation where a house came up for sale which we wanted to buy but but didn't have the money at the time, when we discussed with the bank the first thing Credit Mutuelle offered was in effect a bridge loan, 2.75% for the first 12 month, with no monthly repayments for 12 months, no security required. Loan now repaid after the sale of a house in Valencia city centre last week, 8 months later.

However a few pertainant points. Both my (french) wife and I have full time jobs here, we have a number of rental properties and the rents are paid into the CM account, the account has been active for about 20 years, and my MIL is the biggest employer in the town! However, I am no sure your friends would get a sympathetic interview at a french bank, they like to see income, the question of equity/security seems foreign to them. If your friends are British pensioners, ie asset rich, cash poor, they may be better off talking to a British bank.

 

[NormanH]

This is one site which explains it (in French)

http://www.empruntis.com/financement/guide/pret-relais.php