Commercial Mortgage Abroad

JustKate_3

Me and my partner would like to buy a property in France, which we could use as a B&B, or ideally self-catering apartments.

We own a home in Bristol, which we would like to rent out, and move to the new property in France.

We have no experience in setting up a business, so I was wondering if anyone could give me information of the type of finance I could get in order to buy the property abroad.

Obviously, we don't want our current house to be involved at all, if needs be we could probably scrape together a deposit of about 10k, but not much more.

I was wondering if commercial mortgages are available without a deposit, and how English companies would feel about the investment being in France.

Also, would this strictly be a commercial property, as we will also be living there, or would it have to be classed as part-commercial?

Does anyone have any experience of working with specific commercial mortgage companies, a quick google search gave me loads I had never heard of, and some past experience to find a good one would be greatly appreciated.

Thank you for your help.

holly_hobby

You will find that you probably need a deposit more akin to 25% - 35% rather than the 10% you currently hold - there are also lender and legal fees to consider too - so I think you may be a little short at this present time.

As someone to bounce this off, a UK lender who may be open to finance in France is Santander (as Abbey used to loan on properties in France & also in euros - pre their move to the Santander group).

Give Santander a quick call to verify what their min deposit is, and what experience they will want you to have to fit the application process (if you have no experience of running a business or B&B, combined with even a 25% deposit I think you may struggle in todays market - but its worth bottoming it out with them).

Alternative is of course a commercial broker (as a complex area, there will probably be a fee for their assistance/general advice - even if the application does not go through to a successful agreement - so do check before you sit down with them what their general advice fee is)

I know this is a little negative, don;t be down hearted (where there's will there's a way .. buy you may have to involve your home for any real chance) and I wish you well with your enquiries ..

Holly

Thrugelmir

JustKate wrote: »

Obviously, we don't want our current house to be involved at all, if needs be we could probably scrape together a deposit of about 10k, but not much more.

With any type of commercial transaction expect to be asked for security. As why should a bank take all the risk?

Sounds as if your plan is very much a dream without much substance.

French tax system is very different to UK as well. So suggest you spend some time abroad researching the proposition.

JustKate_3

Holly, thanks for the tip about Santander, I will give them a call and see what they say. I do currently have accounts with them, so that might work in my favour!

I do have experience of managing my village pub, but not a B&B type venture before.

I have delved into the dark and twisty world of the commercial mortgage broker today, but the UK ones don't seem to want anything to do with France, and I'm having trouble finding a French one which is for commercial properties, not just a normal mortgage.

My partner works over the internet, and will be continuing to do that whatever happens, so that would provide an additional income.

Thrugelmir wrote: »

With any type of commercial transaction expect to be asked for security. As why should a bank take all the risk?

...

French tax system is very different to UK as well. So suggest you spend some time abroad researching the proposition.

Maybe I am being naive here, but surely people don't secure businesses against their own homes, because if the business goes under you end up homeless.

The hotel we are looking at in particular has 9 letting rooms, and a 25 cover restaurant, as well as a 3 bed owners flat for around £225,000 in the ski town of Le Mont Dore. Looking at properties for sale in the area, this seems to be a fair, if not cheap, price for the property on it's own, which is in good condition but does need some redecorating. Surely the business could be secured against this property, and leave our Bristol home out of the equation.

In terms of tax, we have looked into the system. I haven't yet drawn up a business plan, or received figures from the current occupiers, but the French government is currently running a auto-entrepreneur scheme, whereby you pay a flat rate of tax to cover all aspects of the business if the turnover is under £81,000, to make it easier for people to set up small businesses. As I say, I haven't looked at the figures yet to see if we would be eligible for this.

Kate

holly_hobby

Well you seem to have made some relevant enquiries with this, any prospective lender will of course ask for further deatiled figs.

Before you do anything, get a copy of the books and have an expert look over them.

You say you have managed a local pub was this also managing the books, profit margins etc, or more front office duties only ? ( you can see the relevance a lender will make)

Questions such as how long the owners have held and operated the property, why they are selling - normal qs that you would ask anying selling up on a business.

As a ski-resort based hotel, what about the closed season, does it have one ? What is the plan during any closed period ? (I'm not a skiier as you will guess ! )

Is the French gov scheme open to just French nationals, residents, EU citizens ... what are the terms, what are the clauses if the business fails ?

Your partner retaining his income & employment will certainly assist your application - but does this mean you will need to appoint staff as he won't be about to assist ? Have you factored staff salaries into your figs ?

Your deposit and funds appear a little low, you may have to consider releasing equity from your home to assist.

Its a very complex and serious proposition, and whilst posters may offer opinion, or experience - you need to speak directly to a broker/lender to gain some perspective on this.

In addition to Santander (whom I have no idea will lend, but may be an avenue to explore from previous experience), you may consider pursuing your application through a French bank, I obv have no idea on their criteria etc - but I would imagine that LTVs would be pretty similar to UK lenders, and of course they will advise of the legal formalities of the French conveyencing system.

Hope this helps give a little clarity and assistance

Hollly
,

SouthCoast

Maybe I am being naive here, but surely people don't secure businesses against their own homes, because if the business goes under you end up homeless.

Check out the Bankruptcy Board to find real life stories.

antrobus

JustKate wrote: »

Maybe I am being naive here, but surely people don't secure businesses against their own homes, because if the business goes under you end up homeless.

Yes they do. In fact it's a pretty common requirement for business finance. From the lender's point of view it's a pretty good idea because, a) you get the security, b) you know the borrower is going to try extra hard to keep the business going if their home is going to be at risk, and c) you'd be surpised at how many 'can't-fail-rock-solid' business propositions turn out to be 'too risky' when the prospective borrower realises that they might have to surrender the keys to their abode.

Thrugelmir

JustKate wrote: »

Maybe I am being naive here, but surely people don't secure businesses against their own homes, because if the business goes under you end up homeless.

No risk no gain.

If you can't afford to lose the money nor can face the thought either. Then a high risk venture is not for you.