Mortgage lending through UK lenders has dried up across the board over the past 12-24 months. This has inevitably had an impact on the ease with which British buyers can secure finance through UK banks to purchase property in France. The days when homeowners released equity from their properties to pay for that dream holiday home in Provence are now a distant memory.
A combination of falling house prices in the UK eroding the equity that homeowners have in their properties and the UK mortgage market drying up and leaving homeowners with very few remortgage options, has seen an increasing number of British buyers turning to a French mortgage as a means of financing a property purchase in France. Also, with the Pound currently weak against the Euro, buyers can take currency fluctuations out of the equation, and potentially save thousands of pounds on the purchase, by taking out a French mortgage and holding onto the property until Sterling rallies.
For those UK buyers who have 15-20% deposits, French mortgages are proving particularly popular as they can take advantage of some of the lowest mortgage rates in French history. Although historically French lenders have had much more stringent lending criteria thanUK banks, for those borrowers who can meet these criteria, there are some exceptionally attractive fixed and variable rates on the market. It is even possible to secure 100% mortgages if the borrower has savings that amount to 30% or more of the amount they want to borrow.
It’s worth noting that borrowers will have to prove they can afford the repayments on the mortgage. French mortgages work on the basis that the total of all mortgages and loans held by the borrower do not exceed one-third of their income, which means that monthly repayments on a UK mortgage will be taken into consideration when trying to fund a property purchase in France.