Remortgaging in France

Remortgaging is a process that replaces an existing mortgage with a loan from a new lender.  Remortgaging is almost identical to refinancing, the only difference being that a remortgage always involves a new loan from a new lender.  A refinance involves a new loan from the existing lender or a new lender.  The concept of remortgaging is relatively new in France but can offer a variety of benefits.

Remortgaging your French real estate may provide for long term cost savings.  When you purchased your property the interest rate offered to you may have been high due to current economic factors or your own credit situation, years later remortgaging your property to a lower interest loan may be financially rewarding.

If you feel you may be able to obtain a new loan at a lower interest rate, you must consider multiple factors.  While the interest rate itself is of primary importance, the cost in fees and taxes of obtaining the new mortgage and the possibility of a prepayment penalty on the old mortgage must be weighed.  The length of time for repayment of the new loan compared to the number of years remaining on the existing loan may impact your monthly cost savings differently then the cost incurred over the life of the loan.

Equity release is another major reason you may want to consider remortgaging your French real estate.  Due to the expense, remortgaging to release equity is typically an option for property which you have owned for a long time.  Equity can build in a home over time as a result of paying down an existing loan or the increase of your home’s value.  Remortgaging can release that equity so it can be used for home renovation, education expenses, travel, and more.  At the time of purchase, if you anticipate these types of expenses it is better to simply obtain a larger loan in the first place.

Remortgaging to obtain better loan terms or to release equity in your property is an option available to French property owners that has pros and cons which must be weighed carefully.

by Cheryl Hartzman, AboutFrenchProperty.com - Copyright © About French Property