11 November 2015 - Mortgage France News |
UK vs Mortgages in France
One of the most common dilemmas facing British people who are purchasing a property in France is whether to take out a Mortgage in France or a mortgage in the UK. Of course, it may seem less daunting to opt for the latter. But often there are great benefits to be had from taking out a French mortgage! Here are a few reasons why…
Only a French bank can secure a mortgage directly against a property in France.
This means that, if you wish to take the financing out in pounds, a UK bank would have to secure the loan against an asset in the UK. For British buyers, this tends to mean remortgaging your main home.
French mortgage rates are often lower than UK rates.
Base rates in France have dropped as a result of the economic turbulence in Europe over the last few years, leading to some great low French mortgage rates! These often compare favourably to the rates available for remortgaging in the UK.
You can avoid high foreign exchange costs.
If you take out a mortgage in pounds, you will have to transfer everything into euros in one go, in order to complete your French property purchase. This will involve high transaction fees. So why not take out a mortgage in France, which will be provided in euros straight away? This means there is no need to make a foreign exchange, so you will avoid those fees.
…and you can even take advantage of foreign exchange rates!
Having taken out a French mortgage, you will naturally have to pay it off in euros over a certain term. But you can be smart about doing so. When the pound strengthens, you can make a big transfer into euros to make the most of it. So if the exchange rate moves against you, you will then have enough euros to keep making your repayments without having to keep making transfers at an unfavourable rate.
It can help you keep the tax man away.
If you plan on letting your property out while you’re not using it, you may have to pay taxes on the income. But if you take out a French mortgage, the interest payments you make on it can be used to offset the amount of tax that you are eligible to pay.
It protects you against negative equity.
By raising finance in pounds, your debt will be in a different currency to your French property. Let’s say the pound then weakens against the euro. This could mean that the amount of money that the house is worth will not cover your debt if you choose to sell up. This is negative equity. Taking out a French mortgage in euros does not expose you to this risk.
It is the best time to release some capital against the property.
There are many French banks that provide mortgages in France to overseas buyers. However, it is much harder to take out a mortgage in France when you already own the property. This is why you should take advantage of the opportunity while you’re purchasing a property in France, in order to realise some of that equity while it is still available to you.
If you want to find out more about the French mortgages currently available to you, pick up the telephone today and speak with one of our specialist French mortgage consultants!
Found a property? Request a quote now or call +44 (0)207 484 4636