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Monaco Mortgage Factsheet and FAQ

Monaco Mortgage Guide: Factsheet and FAQ

Fact Sheet: Monaco Mortgages for Non-Residents (HNWIs)

Key Facts:

Eligibility:

  • No restrictions on foreign ownership; non-residents eligible.
  • Banks require strong financial standing and thorough due diligence.
  • Monaco applies strict anti-money-laundering checks.

Mortgage Types:

  • Fixed-Rate Mortgages: Stable monthly payments.
  • Variable-Rate Mortgages: Linked to Euribor + margin.
  • Interest-Only ("In Fine") Mortgages: Common among high-net-worth individuals; principal repaid at term-end, often secured by pledged assets.

Mortgage Process Timeline:

  • Pre-approval (optional, ~1-2 weeks).
  • Property search & signing preliminary contract (10% deposit required).
  • Formal mortgage application & underwriting (4-6 weeks).
  • Mortgage offer and 10-day cooling-off period (mandatory).
  • Closing (Acte de Vente) with notary (~8-12 weeks total).

Mortgage Features:

  • Loan terms typically shorter (5-15 years), up to 20-25 years possible.
  • High down payment (equity contribution) typically required (30%-50%).
  • Loans commonly denominated in EUR; multi-currency loans rare but available.

Key Numbers:

Aspect Typical Figures
Loan-to-Value (LTV) Typically 50%-70%; occasionally up to 100% with pledged assets
Interest Rates Fixed: ~3%-4%; Variable: Euribor + ~1%-2% margin
Deposit (Cash) Usually 30%-50% of property value
Debt-to-Income Ratio Approximately 33%-35% monthly income
Minimum Loan Amount Generally €500,000+ due to high property prices
Typical Mortgage Term 5-15 years standard; up to 25 years in rare cases
Mortgage Registration Costs ~0.5%-1% of loan amount

Key Costs & Taxes (Beyond Mortgage):

Property Purchase Costs:

  • Existing Properties: ~6% total (notary fees ~1.5% + transfer tax ~4.5%).
  • New-Build Properties: 20% VAT included in price + ~2.5% notary & registration fees.

Agency Fees:

  • Typically 3% of the property price (+20% VAT); often buyer pays.

Mortgage Registration Fees:

  • Approximately 0.5%-1% of loan amount.

Mortgage Arrangement Fees:

  • Typically ~1% of loan amount; negotiable based on relationship with bank.

Insurance:

  • Life Insurance: Often required; premiums depend on borrower’s age & health.
  • Home Insurance: Mandatory; typically a few hundred euros annually.

Equity Release & Refinancing in Monaco:

Equity Release:

  • Limited; primarily through private banking and asset-backed lending arrangements.
  • Rarely exceeds 30% LTV without significant pledged collateral.

Refinancing:

  • Possible, especially to capture lower interest rates.
  • Early repayment penalty typically capped at 3% or 6 months' interest (whichever lower).

Tax Advantages & Considerations:

  • No Annual Property Taxes: Monaco levies no ongoing property taxes or council taxes.
  • No Capital Gains Tax: No tax on profits from property sales (except French nationals subject to French CGT).
  • Rental Income Tax: If rented, 1% tax on rental income.

Key Considerations:

Documentation Required:

  • Passport, proof of address, bank statements (3-6 months).
  • Comprehensive income verification (pay slips, tax returns, company accounts).
  • Full disclosure of liabilities and source of funds.

Asset Requirements:

  • Banks frequently require substantial assets deposited with them.
  • High-net-worth borrowers may leverage asset-backed lending (interest-only loans).

Foreign Currency Risks:

  • Mortgages generally EUR-denominated; consider currency fluctuation risks if income/assets in other currencies.

Ownership Structures:

  • Personal ownership common; SCI (civil property company) used occasionally for estate planning.
  • Complexities arise with corporate structures, impacting taxes, lending, and legalities.

Resale Considerations:

  • Highly liquid market but expect high transaction costs (~6%-10% of property value).
  • Early loan payoff penalties common for fixed-rate mortgages.

Illustrative Example Scenario:

  • Property Purchase: Monaco apartment, €2 million.
  • Mortgage: 60% LTV (€1.2M), 20-year fixed-rate, 3%.
  • Monthly Payment: ~€6,650 (Capital + Interest).
  • Deposit & Fees: Approx. €800k deposit + €120k notary & tax + €72k agency fees (~€992k total upfront).
  • No annual property taxes; ongoing insurance & mortgage interest only ongoing costs.

Next Steps:

  • Engage a Traverse for a set of personalised options.
  • Pre-arrange funds for down payment and associated fees (significant cash liquidity required).
  • Carefully review loan structures (interest-only vs. amortising) aligning with financial strategy.
  • Factor in Monaco residency implications (if applicable) and consider asset management benefits.
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FAQ: Mortgages in Monaco

Who can get a Monaco mortgage?

Mortgages in Monaco are available to both residents and non-residents without nationality restrictions. Monaco’s banks require applicants to demonstrate significant financial stability, strong income, and substantial assets. The principality imposes strict due diligence, including comprehensive anti-money-laundering checks. Typical requirements include a solid financial profile, a low debt-to-income ratio (ideally below 35%), and extensive documentation verifying income and assets.

Foreign buyer conditions: Non-residents are eligible but often face stricter terms. Typically, lenders require higher down payments (30–50%) and lower loan-to-value ratios (LTVs). Some banks might require non-residents to pledge additional assets or place substantial deposits under the bank’s management. Being a non-resident or foreign national isn't restrictive, but it can impact lending terms and result in slightly higher interest rates compared to residents or EU nationals.

Maximum Loan-to-Value (LTV)?

How much can you borrow? Monaco banks usually offer conservative LTVs, commonly ranging from 50% to 70%. Buyers typically contribute a down payment of between 30–50% of the property price. Exceptionally, banks might offer up to 100% financing for ultra-high-net-worth individuals who pledge significant additional collateral, such as liquid assets or investment portfolios.

Example: A €2 million apartment typically requires a down payment of €600,000–€1 million (30–50%), with the remainder financed by the bank (€1–1.4 million).

Banks adjust LTV depending on the borrower's financial strength, residency status, pledged assets, and property liquidity.

Typical Interest Rates?

Current rates: Mortgage rates in Monaco align closely with European trends. As of 2024–2025, average fixed rates range between 3%–4%, and variable rates typically are set at Euribor + 1% to 2%.

Fixed vs. variable:

  • Fixed-rate: Guarantees stable payments over the loan term.
  • Variable-rate: Adjusts regularly according to Euribor plus a bank margin, providing lower initial rates but potential volatility.
  • Hybrid or capped rates are available occasionally, offering initial fixed periods before switching to variable rates.

Rates depend significantly on your relationship with the bank and whether you hold additional assets with them.

Interest-Only Mortgages?

Are interest-only loans available? Yes, interest-only ("In Fine") loans are quite common in Monaco, especially among high-net-worth clients. With these loans, borrowers only pay interest monthly and repay the entire principal at maturity.

Key points:

  • Typically offered for 5–10 years.
  • Usually secured by pledged assets or significant collateral.
  • Commonly requires maintaining substantial funds or investments with the lender.

Required Documentation?

What paperwork do you need? Monaco lenders demand extensive documentation:

  • Identification: Passport, proof of address.
  • Income verification: Payslips, tax returns, or company financial statements (last 2–3 years).
  • Bank statements: Typically covering at least 3 months.
  • Existing liabilities: Loan and mortgage statements.
  • Asset documentation: Evidence of financial assets (bank/investment statements).
  • Property details: Preliminary purchase contract.

All documents should be comprehensive and might require translations into French or English.

Time to Get a Mortgage?

How long does it take? Mortgages in Monaco typically take 8–12 weeks from application to funding:

  • Pre-approval: 1–2 weeks (optional but advisable).
  • Formal application and underwriting: 4–6 weeks.
  • Cooling-off period: Mandatory 10-day reflection period.
  • Closing: Usually within 2–3 months after preliminary agreement.

To avoid delays, start early and promptly provide requested documentation.

Life Insurance?

Is life insurance required? Life insurance, covering the full loan amount, is typically required by Monaco lenders.

Points to note:

  • Policies usually must cover death or disability.
  • Premiums vary based on borrower’s age and health.
  • Banks may offer their own group policies, though external providers are acceptable.
  • Home insurance is also mandatory.

Buying Through a Company or Trust?

Can I use a company or trust? Using companies or trusts for purchasing Monaco real estate is possible but complicated:

  • Monaco recognises personal or civil property companies (SCI).
  • Foreign trusts or offshore companies are typically discouraged due to transparency concerns.
  • Banks offer fewer favourable terms (lower LTV, higher rates) if structures are complex.

Most buyers choose personal ownership or local SCIs for simplicity and tax efficiency.

Taxes?

What taxes apply when buying a home in Monaco?

  • Transfer tax & notary fees: Approximately 6% for resale properties (1.5% notary + 4.5% tax).
  • VAT (TVA): 20% on new-build properties, typically included in the price, plus ~2.5% for reduced notary and registration fees.
  • Agency fees: Typically 3% (+20% VAT) usually borne by the buyer.

Monaco has no annual property taxes nor capital gains tax for most non-French nationals, making ownership tax-efficient long-term.

Currency Fluctuations?

How does currency risk affect me? Monaco mortgages are primarily denominated in euros. Currency risk arises if your income or assets are in other currencies, potentially increasing repayment costs if the euro appreciates.

Tips to manage risk:

  • Hedging strategies or forward contracts.
  • Keeping euro liquidity as a buffer.
  • Monitoring exchange rates regularly.

Renting Out the Property?

Can I rent my mortgaged home? Yes, Monaco banks generally allow rental properties, but you must inform the lender and your insurer. Rental income incurs a modest tax (1% of rental income) in Monaco.

Rental income is typically not considered for mortgage eligibility.

Tax Benefits of a Mortgage?

Are there tax deductions for having a mortgage? Monaco does not levy personal income taxes, thus no mortgage interest deductions exist for individuals. The primary indirect benefit is that mortgages allow you to preserve capital for other investments.

Capital Gains Tax?

Will I owe tax when I sell? No capital gains tax is levied in Monaco for most property sales, except for French nationals subject to French CGT rules.

However, expect high transaction costs (6–10%) upon sale.

Restrictions on Reselling?

Can I resell soon after buying? Yes, Monaco imposes no timing restrictions on resale. However, early repayment penalties on fixed-rate mortgages (typically up to 3% or six months’ interest) may apply.

Moving to Monaco?

Does owning property help with residency? Owning property supports residency applications but does not automatically confer residency. Residency requirements include demonstrating sufficient financial means and stable accommodation.

Recent Legal Changes?

Have there been recent legal changes? Monaco regularly updates financial regulations, notably around transparency and anti-money laundering. Banks must comply strictly, leading to extensive financial checks on mortgage applicants. However, recent years saw no significant negative impacts on buyers.

Using Financing from a Home Country Bank?

Can I get a loan from a foreign bank for a Monaco property? Generally no, as foreign banks typically cannot secure loans against Monaco real estate directly. Buyers usually either take mortgages through Monaco banks or fund purchases through asset-backed loans abroad, using personal collateral.

Revaluation of the Property?

Does the bank revalue the property later? Banks in Monaco typically do not periodically revalue property after the initial appraisal. The mortgage remains stable unless you refinance, at which point a new valuation is conducted.

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