Buying property in France - rates now as a low as 1.95%

Country:  France

Conti, the UK's leading overseas mortgage specialist, is now offering one of its lowest rates ever for property in France, at just 1.95%.

France still accounts for the biggest number of mortgage enquiries received at Conti, and that shows no signs of changing. It has always been a pretty safe haven for overseas buyers, and there are many reasons why it's now the most popular. It continues to enjoy a very stable property market, primarily due to its financial system having been more cautious in the past, and as it's in a relatively secure situation, there's a strong appetite for lending to foreign investors. In some cases, it's possible to borrow up to 100% of the value of the property.

Clare Nessling, Conti's Operations Director, says: "According to our records, this is the lowest rate we've offered for property in France. The country has become an increasingly attractive investment option, not least because of very low interest rates and easy access from the UK, but also due to the falling value of the euro, and lower property prices, with many sellers dropping their prices to levels we've not seen for several years. But the bargains won't last forever, so prospective buyers may want to act sooner rather than later."

Investors reaping rewards of euro mortgages
Earlier this year, Conti reported that an increasing number of clients were opting for euro mortgages, in order to beat the poor exchange rate. This trend has continued, and investors are already benefiting from this decision. Over the next few years, they could potentially save significant sums of money if, as experts predict, sterling appreciates against the euro, as this will reduce the sterling cost of the property purchase.

For example, if an investor had taken out a euro mortgage of €250,000 in February this year for a property in France, based on the exchange rate at that time of around €1.1 per £1, they'd have been required to make a commitment of around £227,000 to pay that mortgage off.

The exchange rate has improved since then to around €1.2 per £1, so it would now cost £209,000 to redeem the mortgage - a reduction of £18,000, or 8 per cent, in the sterling cost of the property in just four months.

If, over the next year or two, the exchange rate increases to €1.3, investors would only have to find around £192,000 to repay the mortgage. So the cost of the property would have reduced by £35,000 in sterling terms.

Investors would have to factor in the impact of mortgage costs and notaire fees. Conti always recommends that an overseas mortgage and the income used to service the mortgage repayments are in the same currency, to avoid fluctuations in exchange rates.

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