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Business Mortgage


Jenny B

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Dear All,

 

We are moving over to Charente Maritime area (17) in May this year my husband works off shore but we were looking to buy a property with gites and finance it with a business mortgage, has anyone out there done it and can advise us.  Is it a realistic option?  Is it possible to do part residential mortgage and part business

We would appreciate any advise or experiences you could share with us.

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Hello Jenny,

First of all, i'd like to advise you that french banks are less and less confident to lend money for a gite or B&B business, due to the number of gite bankruptcy , especially this year.You really have to show that your gite would be very attractive and you'll provide a real good service for your clients.Then if you don't have any deposit, forget it.The minimum requested is between 20 to 30% of the purchase price, but more and more, some are asking 40 or 50%!!!

If you think that 's not a problem, so go on because some gite are doing really well and i really wish that you will be one of them![*]

 

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  • 4 weeks later...

It can be done. What you'll need is a business plan and financial projection, both in French. The financial projection needs to be done by a French accountant, or at least that's what we were told (cost around 350€).

The deposit we were asked for was 40% in the end however initially they said 30% was OK. Bear in mind that if you use one of the regional banks (eg Credit Agricole), they are very regional. In our case, we started out talking to one office, then found after a few weeks that it was our local office that was dealing with us (and asking some peculiar questions). Thought that it was all settled then they announced that they were passing it on to HQ for approval and at that time the "mortgage" terms were changed (helpfully, they didn't tell us this 'til rather late in the day).

You can't do a split "mortgage" but you could have one commercial and another private one. I wouldn't recommend that as you'd then be running with two applications at once and each is approved in a different place and comes with two application fees of course.

Incidently, it isn't a "mortgage", it's a commercial loan. This is an important difference as a mortgage requires that you prove the mortgage payments are no more than 30% of your income whereas a commercial loan doesn't have this limitation. For tax reasons (capital gains), it's best to own the property as an individual rather than as part of your gite company although that makes the cost of the loan non-deductable as a business expense (there are ways around that: see your accountant).

If you PM me, I can mail you the business plan we ran with to give you an idea of what's required.

 

Arnold

 

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