With the French interest rate being at a record low, there are many advantages to taking out a French mortgage, in addition to the added security it provides you with when completing your property transaction. A French bank will always require that certain checks have been carried out on the property on which they are securing finance, including confirmation that it is fairly valued and that there are no old mortgages or ownership titles held on the land. These additional checks are not always required when a property is purchased with cash.
The extreme volatility recently experienced with the sterling/euro exchange rates also highlights the currency exposure that exists when purchasing a property overseas that is valued in a non-sterling currency. As the availability of information regarding French mortgages improves, the benefits of using French finance to offset this currency exposure are becoming increasingly widely recognised.
A French mortgage is also a very good way of reducing the sterling cost of purchasing a property in France. If you were originally thinking of completing your French property purchase in cash but are now concerned about the exchange rate, you may want to consider using a flexible French mortgage. By doing it this way, you are able to reduce the sterling cost of your purchase as you will only realise the low exchange rate on the deposit that you transfer across to France. With mortgages in France currently available at a loan to value of up to 90% your deposit could be as little as 10%.
If you choose a flexible mortgage with no redemption penalties it can then be redeemed at a later date once the exchange rate has recovered in your favour.
There is a wide range of flexible products currently available on the market. Generally, fixed rate mortgages incur redemption penalties during the fixed period and these can be fixed for 5 or 10 years and in some cases for the term of the mortgage. However, there are a number of variable products available where monthly repayments are fixed for 3, 6 or 12 months and then revised at the end of that period.
If you are considering taking out a French mortgage, there are significant advantages to working with a specialist French mortgage broker. With interest rates currently very volatile and the information that is publically available about French mortgage rates scarce, using a broker will ensure that you have access to the most up-to-date market information, as well as ensuring that the transaction goes through as smoothly as possible.
If you are keen to snap up a bargain and ensure that your negotiating position is as strong as possible it may also be worthwhile considering getting pre-approved for a mortgage. This can be simple to achieve and will provide you with additional peace of mind in knowing that you have an agreement from a lender that they will lend you a certain amount. As far as any vendor is concerned this will put you in the same position as a cash buyer and allow you to complete your purchase in as short a time frame as possible.
For more information about getting a French mortgage, or to receive a quote, contact one of our mortgage advisers today.
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