Jonathan Eley and guests discuss new pension rules that will apply from next April, what to bear in mind when buying property overseas, and how investors can access ideas emerging from universities
As the pound shoots up against the euro, the price of a bolthole on the continent is rapidly shedding its cost.
Last summer the value of sterling was around €1.14, whereas it’s now hovering at €1.26.
Coupled with a few years of falling prices in Europe and, suddenly, that farmhouse in the Tuscan Hills or villa next to the beach looks remarkably good value – especially when compared with overheated parts of the British market.
It’s entirely possible to pick up a property for as little as £40,000 in southern Italy and a home for less than £100,000 in Spain and Portugal (See gallery below).
Les Menuires 3 Valleys, France; From £141,000
Ski-in ski-out apartments are available in this new development. With full rental management, the property can be used by owners up to eight weeks a year.
So many British buyers in France do the same as the French, and loans on offer are generally the same for foreign buyers as domestic ones. “But note that life assurance is compulsory in France when taking out a mortgage – not just strongly suggested as in the UK,” says Busby. “It is sold with the loan and the additional cost could be 0.25 per cent on top of the rate – so you pay 3.75 per cent rather than 3.5 per cent.” Rates are currently around 2.5 to 4 per cent, suggests Conti, and unlike many other countries where the best rates are limited to those with the biggest deposits, there are many good deals which require just a 15 to 20 per cent down payment.
Seventy per cent LTV is typical for an investment property. Mortgage types are pretty similar to those available in the UK, so rates can be fixed, capped or variable, and although there are some interest-only options, deals tend to be on a capital repayment basis. “Long-term fixes have been very attractive with British buyers but equally, it’s been quite high-end market for us in the past six months and with many people thinking of clearing their mortgage sooner rather than later, they are taking variable deals,” adds Busby. For Athena, for whom the Alpine market has been especially strong this year, the average loan is €450,000 to €500,000 – up from €250,000 a year before that.
The European Central Bank (ECB) has cut its benchmark rate by 0.1% and reduced its deposit rate to below zero in a bid to boost lending in a move that will help further stimulate the overseas property sector across Europe
The overseas property sector across Europe is set for a big boost after the European Central Bank (ECB) lowered one of its crucial interest rates to below zero and cut its benchmark rate by 0.1%.
Rate decreases on government bonds and an increasingly bullish buyer’s market in France have pushed mortgage rates down to their lowest levels ever recorded. Average lending rates have now dropped to 2.85% from the previous lows of 2.90% recorded in May 2013 and this movement is only likely to fuel the property market further argue French property and mortgage specialists.
French lenders are seeing an increase in activity due to fantastic buying conditions in France with prices in popular regions attracting overseas buyers and French holiday home seekers.
British people are still keen on property in France and UK based lender French Private Finance has reported that May saw the single largest increase in applications since 2007.
Competition between French banks for domestic buyers has created the cheapest mortgages for UK and international investors in the country since the end of the second World War.
A 20-year fixed rate mortgage now stands at 3.35% and 20-year tracker mortgages start from 2%, claims mortgage firm French Private Finance.
The cost for a €100,000 loan has now dropped to €572 per month for a fixed rate over 20 years and €502 per month for a variable rate at 2%.
With French fixed rate mortgages at an historic lows, French mortgage company Athena Mortgages has launched its lowest-ever fixed rate deals, with 15-year fixed rates from 3.30%, 20-year fixed rates from 3.45%, and 25-year fixed rates from 3.60% – all deals are available at 80 per cent loan-to-value.
Athena Mortgages has witnessed a jump in the volume of enquiries in August from UK buyers looking to take advantage of the cheap fixed rate deals on offer, in order to buy property in France.
The French mortgage specialist also expects rates to fall further in September.
Interest from UK buyers in the French property market has boomed this year. Faith Glasgow offers pointers for investors looking to profit from holidaymakers.
Despite economic uncertainty, UK investors are returning to a longstanding favourite haunt – the French property market.
Prices have ‘rebounded’ over the past 12 months, according to French mortgage specialist Athena Mortgages, and interest from UK buyers has been growing since the start of 2010: new enquiries were up 72% during the first quarter of 2010 compared with the fourth quarter of 2009.
John Busby commenting on the current French leaseback market. >>Read more
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