Re-financing French Property — SARON Loan vs. Margin Loan? Looking for Input

Real Estate
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Hi all,

I’d love to gather your thoughts and wisdom on a financing dilemma I’m currently mulling over.

I own a rental apartment in France, worth about €700k. There’s €125k remaining on the mortgage, currently financed through a French bank with a 2.75% principal + interest loan. The property is rented out long-term and brings in €2,250/month, so it’s decent from a yield perspective but could definitely cashflow stronger.

I’m exploring ways to unlock some equity and improve the cashflow. One option I’ve been offered is to refinance the €125k mortgage in CHF with my Swiss bank, using a SARON-based loan with interest-only payments. This would significantly boost cashflow, but it comes with a fair amount of upfront friction — appraisal costs, bank setup fees, and notary expenses. The deal isn’t bad on paper, but the overhead makes me hesitate.

That got me thinking — I have over CHF 800k in my Interactive Brokers (IB) portfolio, and I’m wondering if it might make more sense to just:

  • Take out a margin loan in CHF from IB (say 15% LTV),
  • Pay off the French mortgage in full,
  • And essentially self-finance at what would likely be a lower rate, without needing to go through the whole re-financing circus.

Obviously, I’m aware of the risks of margin loans (especially if markets tank), and even typing this, I’m cringing a little. But it would keep things simpler, and I’d avoid the notary and setup costs.

So here’s where I’d love your input:

  • Would you consider a margin loan for this kind of situation?
  • How would you weigh the costs and flexibility of refinancing vs. the risks of margin?
  • Are there smarter or more Mustachian alternatives I haven’t considered?
  • Has anyone here done something similar?
  • And more broadly: are there any other creative ways I might unlock equity from the property, either through French or Swiss banking channels, or through other financial strategies?

Thanks in advance for your thoughts — this community’s perspective always helps me think more clearly!

Cheers,
Alan

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Side note: you’re aware of the potential impact of the currency mismatch? (loan in CHF, revenue in EUR)

(might not be as bad, since I assume you still have other income in CHF that could cover it, but there still could be some issue if/when you face strong divergence in currency movements)

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This is one basic point of risk management, which can be relatively easy implemented. So, margin loan as a temporary solution: yes, as a long term one: no.

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The question is what will you do with the equity released? Investing in CH RE Estate?
If not don’t borrow in CHF!

CA-Next bank is supposed do make “swiss-like” mortgage in France with euro. Current rate is 2.7% for EURO
They ask you to amortise 50% of the property value so theorically you can get back 225k euro and no more need to repay the debts only the interest like a 1rst rang swiss mortgage

Anyway borrowing 1/7 of a portfolio is not so crazy if your plan is to carry on DCA with significant amount the next years.

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Have you quantified what these one time costs actually are?
and by the way, why not take a loan in France itself from the bank which already appraised the property? Is there any specific advantage of taking a Swiss mortgage?

I believe that any difference you see in interest rate are more based on expected currency devaluation

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  • Would you consider a margin loan for this kind of situation?

No, the mis-match in duration of the funding is too risky

  • How would you weigh the costs and flexibility of refinancing vs. the risks of margin?

Safety first. Also make full use of your borrowing capacity by getting a mortgage against your property.

  • And more broadly: are there any other creative ways I might unlock equity from the property, either through French or Swiss banking channels, or through other financial strategies?

remortgage in France to unlock equity?

How is the mortgage interest taxed in France? I think potentially you might have a tax benefit if you can claim the deduction on the mortgage interest on your French tax return and then double-dip the interest deduction against your Swiss assets in proportion to your Swiss assets (the French property doesn’t make up nearly all of your wealth).

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Thank you all again for your thoughtful input — it’s really helped clarify my thinking.

Currency Risk & Income Alignment

As some of you pointed out, one of the main concerns with the SARON loan is the currency mismatch. The loan would be in CHF, while the rental income is in EUR. That said, my primary income is in CHF and comfortably covers all outgoings, which mitigates the risk somewhat — but I agree it’s not ideal long-term if the EUR were to slide significantly.

SARON vs. Margin Loan

I’ve ruled out the margin loan option for now. The risk of a margin call during a downturn, especially when financing something illiquid like property, just doesn’t sit well with me — even with a conservative LTV and a large cushion.

Pulling Equity

I also looked into Banque de Léman. They would allow me to refinance and pull out equity — but only if I commit to using it to purchase another property. That’s not my intention at this point. Honestly, if I could sell the apartment without triggering French capital gains tax, I’d rather just do that and move the proceeds into ETFs.

Final Decision: Swiss Bank Refinance

After weighing the options, I’ve decided to move forward with a Swiss bank refinancing with BDL. The rate is low, and importantly, it’s interest-only, which significantly improves my monthly cash flow. That flexibility is valuable right now, especially with other financial priorities coming up.

Upfront Costs vs. Cash Flow Gain

Estimated one-time costs for the refinancing:

  • CHF 2,000 – Bank fee
  • EUR 720 – Property valuation
  • EUR 2,500 – Notary fees

All-in, that’s roughly CHF 5,700 upfront. However, the new structure increases cash flow by CHF 500+ per month, which means I’ll recoup the costs in 11–12 months — and from there it’s positions me better to use the cashflow towards early retirement or simply throwing money back into ETF’s.

Thanks again for the feedback all!

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I have a question. Typically we see people trying to invest in RE for diversification. However direct ownership has its own challenges which disincentivize some of us.

What is your reason to prefer an exit (if possible) vs continuing your RE investment?
Is it monetary or more related to hassles of home ownership which only home owners know :slight_smile:

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I have made the same kind of mortgage 12 years ago and will never redo it. The interest rate difference is nothing compare to the depreciation of Euro. I will borrow euros to buy Swiss property but not the reverse.

How do you declare your French rental revenu in France ? A French mortgage with euros interest will be easy to deduce from your rental properties by any french accountant. Doing a setup in chf, it may occured additionnal costs for the french accountant. Not having interest on a rental property will increase the taxation of the revenu.

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