French Mortgages

[Boxxen]

Hi Everybody,

 

My partner and I are just taking the huge leap into the mortgage mine field, can anybody advise on their experiences of UK verses French mortgages, we are only talking about a small amount £40k.

 

[BJSLIV]

The normal rule is to borrow the money in the currency with which you will be making the repayments. If your income is in the UK borrow in the UK, if in France borrow in France. The reason being that whatever the savings  might be made on the interest, can be swamped by  adverse movements in the exchange rate.

 

PS The word Partner gives rise to some concern.

Unmarried couples face enormous inheritance tax hurdles buying property in France, and things can get even worse if their are children of previous marriages involved.

[mrbeeman]

I agree.

I have just looked into borrowing money in France but, once the monthly insurance and the guarantee were taken into consideration and added to the Notaires fees then the much smaller interest rates offered in France were wiped out.

There are some quite good deals offered in England at the moment.

Rob.

[peterw]

The last two posts are correct and incorrect.

True if the currency moves against you you can end up paying more for your payments(euro goes up against pound) but then so has your asset in pound terms- what is better/ worst? an increased cost of servicing versus increased asset . If financially the purchase stretches you, then the risk is high and you need to hedge by borrowing in pounds. If this is not the case and you are able to say afford a 10% swing in interest payments(and given the strict lending criteria that French banks apply to the 30% rulle you should be able to afford this) then my advice is borrow in France- cheaper interest by a mile.