We were not completely naive you know?
We did realise that it was a huge risk to fall in love with a property at such an early stage of our research into the Lot-et-Garonne department, the costs of renovating a French property and what this would mean for our French mortgage. We were perfectly aware that disappointment was certainly a possibility.
We are still gutted though!
Since I wrote Oh no… we’ve fallen in love with a property! we have been off learning loads about the French Mortgage system.
After a long chat with an agent at IPF (International Private Finance) we had our mortgage approved in principle, BUT we were made aware of two things that we had not known before.
The two details of the French mortgage system that have made us change our route:
Firstly, that if the property you wish to purchase needs renovation work done to it to make it habitable then the bank insists that they also lend you the money for these renovation costs.
So, before a mortgage can be agreed you need to take estimates to the bank from French registered builders for the renovation work, they will then approve the loan but only release the money for the renovation work after this work has been carried out and the builder has issued an invoice.
Thus almost doubling the mortgage required for the property we fell in love with!
Secondly, the bank also insists that we have 1 year’s mortgage repayments in the bank before they will agree to our mortgage. Vraiment!?!?
As we are first time buyers, and therefore do not have a lump sum of cash coming our way from the sale of another house to cover the necessary 15% deposit required plus the Notaire’s fees of a further 7-10% we are already having to be ambitious in our ability to save and clever with our plans for the renovation works. We are already working harder and smarter; cutting back on our love of red wine and weekends away; and even considering getting rid of the gorgeous Labrador Becca (pictured by Colin Usher above) who makes our local vet smile on regular occasions with her skin allergies and desire to eat anything that will upset her stomach! (I am only joking about the dog of course… or am I?)
Adding on renovation costs and a years worth of mortgage payments was not in our cashflow forecast! This will not only effect our mortgage repayments (which wouldn’t have been a problem as it’s still much less than the rent we currently pay) but also, of course, the amount of deposit we will need to put forward initially and the backup savings we need in the bank for the years repayments.
These two new pieces of information combined, unfortunately mean that we do not have sufficient savings to purchase the property at this time.
We are not giving up here though! Oh, no! Ceci est juste une diversion sur la route!!!
The creative retreat will still be built but the journey will be a little longer.
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