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What should I do about these mortgages?

(2 Posts)
wallywobbles Sun 08-May-16 08:10:47

I am in France, so different laws, but I went to the bank last week for a mortgage for an investment property of 155k€ They initially offered me an interest rate of 1.4% and they rang yesterday to say that they could reduce it 1.2% and did I want to borrow more as the interest rate is so low.

The property is an apartment in a new build and in France there is a thing called Loi Pinel that allows investments of up to 300€k per year, which allows you to deduct up to 40k€ off your taxes over 12 years, or 30k€ over 9 years.

We have 4 kids between 7 and 11 years old. The apartment is in our local university town, so will potentially be used by the kids when the time comes.

Anyway, I am a higher rate tax payer so this is a good plan for me I think, and my accountant seems to think its a good plan. French accountants are not like English accountant, so they dont actually give advice.

So my plan was to pay 100k€ deposit and take an 8 year mortgage on the remaining 55k€ - the rental income will cover about 3/4 of the costs.

At the same time we are currently restoring a 14th C manor house which belongs to DP, so there is room for all of us to move in together. This will be our forever home. Currently he is going through his divorce, which limits what we can do, as his ex wife in theory could do the dirty. Although in principle everything is a done deal on that house as it has a notarised sale agreement and we have paid most of what she wants for her part. The rest is payable at divorce (we'd happily pay now, but legally cannot). Divorce is very slow in the court he is getting divorced in, due to long term sick judge. Should happen in October hopefully.

To do the work on this house DP has an agreed mortgage agreement for 100k€, but at a rate of 2.16%, and for the energy efficient work on the house he is entitled to a loan at 0% for 30k€. To get the 0% loan it has to be attached to another loan.

So I guess I want some feedback from wiser people than me.

Do I take a bigger mortgage out for the apartment, use some of that money for the renovation, as it all coming out of one pot of money although we are not married yet, with DP taking a smaller (cheaper) mortgage on a shorter period?

Or do we go back to the bank and start again - with joint mortgages for everything, or one joint for the his house and a separate one for me and the apartment?

I kind of want the apartment to be left to my 2 kids, rather than 2 all 4 kids. And I hope to buy another when I sell my family home, so my kids will get one each when I die.

If you have managed to get to the bottom of this, thanks for that alone. And of course for any advice.

concertplayer Tue 17-May-16 16:39:17

I think as this concerns mortgages abroad there may not be
many people here who can advise.
May I suggest you post on the Living Abroad topic as there are
plenty of people living in France/abroad who may know more?

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