bobbi2

We are looking at mortgages here atm. It seems that very few banks do not offer mortgages for solely businesses or gites/Chambre d'hotes. Even as a main dwelling if there is a probability of something there that can or is run as a business mortgages weem hard to get. Is this right?

EuroTrash

From what you read on forums - yes, very much so. There was someone on another site desperate to sell their home that they had been using as a gite or c d'h or whatever, and even though they'd radiated their business and stopped advertising, sales kept falling through because their would-be buyers couldn't get mortgages because the property was flagged up as a business.
I bet PF can recommend someone to help though ;-)

bobbi2

Well the place we are looking at is currently a business but will become a home for us with a small gite which will eventually be rented out when we move there ....after some restoration. We will not be living there for a while and when we do, will sell our old (current) house and pay off the mortgage, so the plan is not to have a mortgage for more than 4 years max. I think she thinks we are buying it solely for the gite and that will be our only income which it isn't as I am working in France, aside from the new house potential. As you mentioned in your posting it may be a problem for the OP, but if they are taking the business with them 100% and we are buying just a home then surely this is not an issue? If we started up a business AFTER the mortgage was paid off then surely that isn't a problem either? Most homes do not get sold as a rolling business do they?

Novocastrian

I have no idea whether this is relevant to your situation, but when we bought a maison secondaire in 2007/8 we were living in Canada in a house which was already mortgage free. It was easy to free up some of the equity in the Canadian property using a Line of Credit secured by the house and use that to pay for the French one.

As far as the French were concerned we were cash purchasers in France. No mortgage needed and no involvement with French lenders.

bobbi2

We have asked with a broker on two occasions now for mortgages. The lending is fine but because the house has 25 hectares of land they said a mortgage valuation is important by whatever bank we choose. He held caution to the fact the land can sometimes affect the value of the property or affect the offer.
They want to know what the land is being used for as having so much land and outbuildings may affect the valuation and resale. Has anyone had problems getting a mortgage because of the same reasons. Some of the land the farmer uses to rotate crop on and the owner uses the land for his own activites. There is a lot of interest in the propertu for certain reasons that I don't want to put on here and this type of property doesn't come up that often, hence the interest.

dmu

Quite apart from the financial side, be aware that the SAFER has a right of pre-emption when agricultural land is put up for sale.
Even for 1 hectare of a mainly non-constructible field adjacent a house! My late neighbour's property was subject to the SAFER"s green light before the sale of the house could go through.
If you buy this property, will the farmer become your tenant? ("métayer"). I would look carefully into all that that involves.....

bobbi2

The land is wholey owned by the seller of the house. He then allows the farmer in the village to use the land for crops in return of maintaining the part the owner is actively using.

dmu

What will happen if you buy the land? You'd have to enter into some sort of contract with the farmer if he stays on....
I imagine that the infamous SAFER will offer him first refusal, before asking around among the farming fraternity.
I forgot to mention that, when we sold our bergerie and 20 ha, the Municipality, Département and then the SAFER had to give the green light before the sale could proceed. A long wait.... We weren't bothered, as we would have got our money from some one, but the buyers were on tenterhooks for months, not knowing whether they were the future owners or not.

bobbi2

Anyone with mortgages please can you answer a question I have. I understand mortgage protection is legally necessary with all mortgages against illness etc and being unable to repay your mortgage back in full. However does life assurance come into this too? I am speaking to one person who says it is separate to mortgage protection however others say the life cover is necessary which I am very sceptical about. I understand the reasons behind have protection is in case of illness ot death and would cover the repayment of the mortgage in full and life assurance is separate again?

dmu

A long time ago, we took out a 12-year bank loan for a buy-to-rent appartment, with the Caisse d'Epargne where we had accounts and had already set up a couple of Assurances-Vie. We obviously took out the reimbursement insurance and at no time did the adviser mention our A-Vs, but since the beneficiary was either OH or me, OH or I would have had enough to continue paying back the loan. If the beneficiary of an A-V isn't concerned by the bank loan and isn't likely to participate, there might be an issue which the lender would take into account. A lot depends on the personal circumstances....
Assurances-Vie aren't compulsory, they are a useful way of investing and saving on Taxe de Succession, as they aren't counted in a Succession, or at least they aren't at the moment....
Hope this is of some help!

bobbi2

Hmm...still a little confused. If you speak to banks here they say mortgage protection is compulsory on all french mortgages. Brokers seem to suggest this is compulsory although I don't think it is and cannot understand the difference? Will a mortgage protection assurance protect your payments with death and pay off the remainder of a mortgage?

dmu

Yes, the lenders need assurance that some one will eventually reimburse the loan, i.e. the borrower or the Insurance Company.
I can't remember what was included in our "mortgage protection" Contract which the Caisse d'Epargne prepared, but it certainly covered an unexpected reduction of income (concerning me in particular as I was still working for myself). Logically, death of one party should also be covered, but I don't know what happens if both parties die before the loan has been totally reimbursed - maybe the lender negociates with the heirs via the Notaire.... It may be that the heirs aren't willing to take over the reimbursements, in which case I've no idea how the ownership of the property would be calculated...
Best to discuss all this with a financial adviser and with the Beneficiaries of any Assurance-Vie that you've taken out!