Second home: Why mobilize your real estate assets to make a project a reality?

To buy a second home or make a real estate investment, there is a less known solution: the mortgage loan. It is an effective financing lever. PraxiFinance explains how it works.

With the arrival of winter and the cold, desires for the mountains and the sun are taking shape. Some think of buying in the mountains to enjoy the joys of snowy slopes and the warm atmosphere typical of high altitudes, others rather in the sun to escape and warm up in destinations with summer temperatures.

To buy a second home or make a real estate investment, in France and abroad, owners can consider a mortgage loan as a financing lever. PraxiFinance, a mortgage credit specialist for 30 years, goes into detail about this mechanism.

How does the mortgage loan work?

The mortgage loan is a tailor-made loan that allows a property owner to obtain cash based on his assets. “Often wrongly considered as a passive asset, real estate assets constitute a tremendous lever for development. We sometimes see traditional banks refusing to support certain projects of their clients when they have a substantial real estate portfolio and good income. This refusal may be linked to the very strict criteria of the banks, such as age or professional activity, explains Éric Cazaux-Devy, President of PraxiFinance. At PraxiFinance, we intervene for a minimum loan of €500,000 for a real estate project[1]. »

To qualify for a mortgage loan, the borrower must be of legal age, tax resident in France, owner (natural person or SCI) of real estate in France for residential use[2] of at least €400,000[ 3] that he will be able to provide as collateral, and have sufficient income to honor the loan installments. "Without age limit or taking into account the state of health (optional borrower's insurance), the mortgage loan also allows seniors and people who have been sick to access credit", adds Nathan Bonin, Communications and Marketing Director at PraxiFinance.

Two options to choose from to repay this loan

The mortgage loan is a way to finance your real estate projects by relying precisely on your real estate assets. Although it costs a little more than a conventional loan, it does not exclude the elderly or those who have been sick and has the advantage of being more flexible (no compulsory borrower insurance, opening of a bank account or savings transfer required).

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Buying in the mountains

“We have a significant demand for mortgage credit in Savoie and Haute-Savoie. These are often wealthy local investors who live around Lake Annecy and want to expand their real estate, reports Nathan Bonin. We mainly intervene for land transactions in the mountains: purchase of chalets, hotel walls, shops or apartments in ski resorts. »

These are solid rental investments, in particular because land is well valued in mountain resorts and rents are high in the winter season. In addition, summer tourism in the mountains is also developing, which represents an additional opportunity for return on investment.

Investing in the sun

Mortgage credit also makes it possible to buy abroad. PraxiFinance thus supports its clients for investments in the European Union and Israel through a contract under French law. However, there are certain conditions to be met: this type of loan is reserved for French residents, for an amount borrowed greater than €500,000 (within the limit of 50% of the market value of the real estate assets held in France). Borrowers are often over 55 years old, owners of a repaid heritage of several residential properties and valued at more than one million euros. In general, they make the purchase in anticipation of retirement, wishing to eventually settle abroad, and/or want to make a rental investment of which they are accustomed. They can rent the house to tourists or lend it to family members or friends when they are not using it.

Nathan Bonin explains: “The destinations most requested by our customers are Spain, Greece and Israel. In Spain, the Costa Brava in Catalonia and the Balearic Islands are on the rise. The real estate market there is secure, inspired by the French model for land advertising. In Greece, it is the coast that is prized and the success of this destination is partly explained by the tax advantage for settling there in the long term – 7% tax on foreign pensions – and the prices of real estate, between 3,000 and 4,000€ per square meter for beautiful properties. Finally, in Israel, Tel Aviv is in high demand. The real estate market is very dynamic in the country with possibilities of valuation between 5 and 10% per year. There are also many new and luxury programs. »

[1] And a loan of €100,000 in cash, whether to carry out a professional or personal project.

[2] Whether it is a primary or secondary residence or a rental property. It will not be necessary to change its assignment during the loan.

[3] The value of the asset(s) provided as collateral is defined by experts.