Getting mortgage for renovations

I have a house in France and would like to renovate my barns and was wondering if I could remortgage to do the work to let them as gites. I already let my house as a gite and wanted to expand. At the moment I have no mortgage on my house. V.S.

For French homeowners who are interested in raising finance against unencumbered property, lenders will always need to know the final purpose of the funds.

In your case, there are many financing options available, as almost all French banks are happy to arrange renovation mortgages.

There are, however, certain points to watch out for with regards to this type of financing.

Firstly, you must be sure that you will be able to meet the bank's affordability criteria. As a general rule, the addition of the prospective monthly repayments should not take your monthly outgoings to over one third of your monthly income.

If the existing gite business is your main source of income, do be aware that you will need to provide proof of historic income going back over at least two years for this to be fully taken into account, and additional income is generally also required to support a mortgage.

Before issuing a mortgage offer, the lender will ask for a complete set of estimates (devis) for the planned renovation works. These must be provided by builders registered in France. To avoid complications and make the application process as smooth as possible, it is advisable to employ one central contractor for the works rather than a number of different artisans.

A valuation will also be carried out to ensure that the works that you are looking to carry out will increase the value of the property significantly enough to satisfy the lender.

After completion, funds will subsequently be released by the bank in stages on receipt of the renovation invoices and paid directly to the builders, so you will be obliged to proceed with the estimates that were submitted to the bank.
Until all funds have been released, monthly repayments will be dependent on the amount drawn down. Some lenders charge an additional commitment fee of around 1.5% on undrawn funds - always check whether this commission d'engagement is applicable.

A French mortgage broker will be able to guide you through this process and explain in detail all the options available.

French lenders all differ in their approach to renovation loans and it is important to understand all the conditions to ensure that your project is a success.