DA-Tax
Lombard Finance
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.
It is difficult to get residential mortgages in France for higher value loans, say over €20 Million. Typically mortgages for high value French properties are obtained from banks in Monaco, Switzerland or Luxembourg.
Monegasque banks usuallt lend using Lombard finance. If you need buy a villa for €40 Million you will take a loan of €40 Million which will be mortgaged against the French property. You will be required to deposit say €15 Million in cash or liquid investments with the bank as a pledge.
The Monegasque banks are looking for long term asset management and so the more of your money is under management with them the keener they become to finance your property purchase. They generally do not want simple mortgage arrangements with no pledged collateral assets.
The loan to value ratios vary from time to time but are fairly consistent accross the banks. You are better off looking at the banks records of asset management. A failure by the bank to manage your pledged assets could be catastrophic as not only will you lose money but the bank will make a margin call requiring you to deposit more pledged funds to maintain the loan to value ratio.
Study of the small print of the banks loan and pledge documentation is a good idea. The banks will alter this if they want your business.
One of the advantages of Lombard finance is greater deductibility for French Wealth Tax. There can also be Inheritance Tax advantages.
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