DA-Tax
Equity Release
This article is for general information only. You should not act or refrain from acting in reliance of it. You should always obtain professional advice on the facts of your particular case. Nothing in this article constitutes financial advice. The owner of this site accepts no liability.
UK residents with property in the UK and France may want to raise cash through equity release. This is common in the UK with a bank taking a mortgage over the UK property in exchange for a financial advance which is only repayable on death. The interest on the loan is rolled up and can never exceed the total value of the property. This is why the amount advanced is never above 60% of the value of the property so there is plenty of headroom.
Equity release has not been common in France. The French have viager which is similar but comes with a few drawbacks.
A few institutions are now offering equity release in France which operate in the same way as in England. They are only available for higher value French properties say over €2 million. They are also available for
Monaco properties. Equity release is available in the UK for much lower valued properties.
French equity release can be for a fixed term. So someone aged 80 may say they will only be able to keep going to their French property for another 10 years until they are 90. The equity release and loan term sheet can be prepared on the basis that the money will be repaid by a property sale after 10 years. In the meantime you have the money to enjoy the property for the next 10 years. This comes with some cost but may be better than selling the French property early on.
If you own a French and or UK property it may make more sense to do the equity release on your French rather than your UK property. The rates may be better. No mortgage will registered at the UK Land Registry so no one will be aware you have released equity. There may be tax advantages in doing it this way.
Equity may be released for costs of living or to make a gift to children. Some of the equity released can be put into investment funds possibly for later retirement years and put in the name of children.
This is always a difficult decision and needs a lot of thought. However in practice it is normally obvious what has to be done.
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