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We are looking to buy a property in France and have received conflicting advice on whether to buy using a French mortgage or to buy outright using an English mortgage, any advice gratefully appreciated and any advice to do with the purchase process would be a great help as we are very naive!!!!!!!
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If you live and work in England - borrow the money in England. If you live and work in France - borrow in France.

Always borrow where your income is - you will be protected against currency value changes while you are repaying the mortgage/loan. In addition, if you use UK income to service a French loan then you will have the constant ongoing cost of currency transfer to deal with. If you borrow in England - with a loan agreement written in English - it is also probable that that you will fully understand the conditions under which you are borrowing.

In the early/mid 1990s a large number of British people had to offload their French properties when, because of large fluctuations in the value of the pound against the franc, they found they could not afford to service their seemingly cheap French loans.



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Just to give you an idea of what we did for our new build.  Raised a mortgage on our property in the UK, drew it down as and when we needed it. Then bought euros from a broker when the rate was more or less favourable.  Opened a french bank account and put the money in there.  The downside was that the euros were not earning much when they were sitting in the French account.  It would take someone with a better financial head than me to work out the pros and cons of euro rate v interest rate on accounts.  I did it that way because it was simple and straightforward. Touch wood  have had no  problems at all.  Just remembered, the brit mortgage account took some persuading to release the money in batches as and when we needed it. I suppose its not quite the same as a new build in the UK.

Good luck


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Hello lloydy4,

I've answered to your question in a section of my website called"why getting a mortgage in France?"


The rate
Rates are very low in France at the present time (Between 2,50% and 4,10% variable or fixed,
between 3 months(bridging loan) to 30 years, at the 25/10/2005)
 The wealth tax

The wealth tax rules vary according to whether you are tax resident in France or not. In both cases, wealth
under 732,000 euros is tax free, but if your assets are worth more than this the tax rates start climbing.
If you buy a holiday home in France and remain tax resident elsewhere, you will only be liable for wealth tax
on your net taxable assets in France, unless exempted by a double tax treaty. Unfortunately for UK residents,
the UK/France tax treaty does not exempt non-residents from French wealth tax if they own more than 732,000 euros in France.
(The list of taxable assets includes the following: Real estate,Furniture,Cars and other vehicles,Horses,Jewellery, Shares and bonds,Redemption value of any life insurances,Endowments,Debts owed to you)
French residents
French tax residents are liable to wealth tax on their worldwide assets including all property. It will be based on your household’s wealth (including spouse and children) as at 1 January each year. Unmarried couples living together are treated as one household for this purpose.
However loans specifically attached to the French assets may be deductible against the asset value to reduce
your wealth tax calculation.
The Law SRU
Under French law, if the buyer has his mortgage application refused three times,
he is legally able to pull out of the sale with no financial penalties. If the purchaser decides to take a loan outside of France, this condition no longer applies and so therefore, if he is refused credit from the bank, and has to pull out of the sale, penalties to the owner and the agency have to be paid.
The euro
It can be worth taking out a loan in euros simply because of the high exchange rate with US dollar,among others.
I hope it might help you to make up your mind.
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It depends on your circumstances. Do you have a mortgage on your UK home? If so then will you be able to raise enough capital from your UK home to finance a property in France?

If the answer to both these questions is yes then your best option is likely to be extending your UK mortgage, you will then have one property freehold and no worries about currency movements except for running expenses which are comparatively minor.

If the answer to the second question is no then you will have no choice but to apply for a french mortgage.

If you have no mortgage at all on your UK home then you can you can go either way. My personal preference is for a UK mortgage because of the potential currency fluctuations but the more favourable french rates cannot be ignored. It depends on your attitude to risk!

Good Luck!


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