01 February 2016 - Mortgage France News |
Mortgage France: learning from experience
If you’re thinking about buying a property in France this year, you may well be keeping a close eye on the current global economic conditions. These will always have a bearing on a purchase in France and, in particular, will affect the sort of French mortgages that may be available for you.
But international financial markets are complicated things, and often difficult to understand. Fortunately, we have plenty of experience in this area so we’re in a position to let you know how the economic changes may affect your purchase in France.
There is currently a high level of uncertainty in financial markets, which is affecting exchange rates, interest rates and property prices around the world. But what does this mean for your French purchase and for your mortgage in France?
Here are some ideas, based on what past experiences have taught us…
- With unstable foreign exchange rates, there is a risk that you will lose out when transferring your money into euros for your purchase. In times of uncertainty, it is therefore a good idea to finance your purchase with a French mortgage.
- This is because the French lender will provide you with euros directly to complete your purchase, meaning that the only foreign exchange transfer you need to make is for the deposit.French interest rates are at historic lows, meaning that a French mortgage has never been cheaper. You can borrow money for as little as 2.70% for a 20-year mortgage.
- This means that you may even be able to continue putting money aside after making the purchase. When exchange rates stabilise in your favour, you can transfer these funds across to pay off your French mortgage at a cheaper rate.
This is an approach that newspapers have often advised for British buyers in France. Please contact us if you would like us to point you in the direction of these articles.In times of uncertainty, the key is often to keep your outgoings to an absolute minimum. Fortunately, a range of interest only mortgages are also currently available in France, starting with rates as low as 2.55%.You may think to yourself that such low French mortgage rates cannot last. If you are worried about them increasing in the future, then French lenders do offer full-term fixed rate mortgages.
- But these mortgages tend to penalise you for paying off the full loan amount in advance. As such, you may prefer to take out a variable or “capped” mortgage, which both give you the flexibility to pay off the mortgage when exchange rates moves in your favour.
- What’s more, even a variable mortgage in France provides you with protection against French interest rate increases. If rates rise, your monthly repayments will remain the same, and instead it is the term of your mortgage that will increase. This provides borrowers with further peace of mind.In terms of the French property market, uncertainty in the wider economy rarely has dramatic repercussions on house prices in France. Despite the so-called financial crises in recent years, prices have remained largely stable.
- This is helped by the reliable interest in France from international buyers. This is a trend that shows no signs of reversing. With returns on financial investments currently very weak due to low interest rates, many investors believe that they’re better off putting their money into something that they can get pleasure out of. And what better than a French holiday home!
So why not follow suit? Even when there is uncertainty in the financial markets, buying a French property remains a shrewd and (more importantly) rewarding investment. Call us today on +44 (0)207 484 4636 to find out how Mortgage France can take you a step closer to making that dream purchase for you and your family a reality.
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