Moving Home to France? How to Use a Bridging Loan to Downsize your Property

15-September-2017

15-September-2017 18:47

in International

by Jennifer Stevenson

We are talking to many people who are looking to buy a second home in France or are looking to downsize and move to France permanently.

France is attractive for many reasons and is arguably one of the most desirable places to live in Europe.

People are making the move for many reasons but Brexit is certainly one of them. With France’s youthful, progressive, economic minded President, many believe France has a bright future.

Downsizing Your Home

If you are looking to move house to France then you may need bridging finance to help with downsizing your home.

A challenge that most people face when looking to downsize their property is how to get adequate finance in place quickly. In today’s economic landscape, the competition for property is fierce and to ensure that you do not miss out on your dream house, you have to move quickly.

Traditional Finance

Traditionally, those who wish to move house wait for their existing property to sell and use the proceeds of the sale to purchase their new home. The issue here is that you cannot forecast how long a property will be on the market for. This means that, potentially, the home you wish to purchase might be taken by another buyer before your existing property sells.

Alternatively, those looking to purchase another property may approach a high street bank to source the finance they need. Mortgage applications with traditional lenders can potentially take up to several weeks or even months to process, which can cause delays and stop you from securing the property that you want.

If you have found your dream home in France and you need to secure adequate finance, then you may want to explore your bridging loan options.

Bridging Loans

Bridging loans may be a viable option, as they provide a potentially large amount of money in a short amount of time.

Bridging loans are a specialist type of loan designed as a short term solution to ‘bridge’ the gap in funding until more permanent finance is in place.

Features of a Bridging Loan

Bridging loans are growing in popularity because they may offer:

Significant finance – It is possible to source between £50,000 and £25m
Funding you need quickly – Finance may be accessed within 5 to 7 working days depending on your circumstances
Flexible terms of finance – Typically from 1 to 12 months
Finance for unmortgageable properties – Funding can be secured for properties that traditional lenders deem unmortgageable

The majority of bridging loan lenders gives borrowers the freedom to ‘roll-up’ interest to pay at the end of the term of finance. If you are looking to downsize to France, this could be an attractive feature, as it allows you to avoid monthly interest payments and use your finance solely to complete the property transaction.

In order to get a bridging loan, borrowers are required to illustrate that there is a clear exit plan in place. An exit plan is the strategy the borrower intends to use to repay the loan at the end of the term of finance. For example, an exit plan could be where you downsize to your new home and then repay the bridging finance with the proceeds of the sale of your existing property.

Bridging Loan Calculator

If you want to see how much you could secure to downsize your property, use our bridging loan calculator

The Costs of a Bridging Loan

Bridging loan finance is more expensive than long term finance e.g. a mortgage. Although the costs are higher than traditional long term mortgage finance the speed and convenience of a bridging loan may maximise the chance of you securing your desired property.

The majority of bridging loans come with an arrangement fee. An arrangement fee is an additional tariff to cover the administrative costs of the bridging loan. These fees are typically between 1% and 2% of the capital borrowed.

In getting the best deal in the market it makes sense to use the assistance of a specialist property finance broker, to negotiate for you and get the best possible terms on your loan.

How to Get a Bridging Loan

If you require a bridging loan to downsize to France, we can help. As a specialist property finance broker, we can arrange bridging loans for downsizing.

We have strong professional relationships with private banks, specialist lenders, family offices and wealth managers and can secure the most appropriate financial solution with favourable terms to meet our client’s needs.