French property mortgage rate from just 1.95%

Monday, July 05, 2010

French property mortgage rate from just 1.95%

People seeking to buy a home in France can now get a Euro mortgage for French residential property with a variable rate of 1.95 per cent at up to 80 per cent loan-to-value from the overseas mortgage specialists, Conti.

The French property market, one of the most stable in Europe, accounts for the largest number of mortgage enquiries received at Conti.

Clare Nessling, operations director at Conti, said: “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.”

The firm is urging prospective homebuyers to consider taking out a Euro mortgage, as investors could potentially save significant sums of money if sterling appreciates further against the euro, which it expects to continue to do so, as this will then reduce the sterling cost of the property purchase.

The following example from Conti indicates that if an investor had taken out a euro mortgage of €250,000 in February 2010 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 since improved to around €1.20 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 €1.30, investors would only have to find around £192,000 to repay the mortgage. So the cost of the property would then reduce by £35,000 in sterling terms.

To read our guide to buying a property in France, click here.


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