Any questions: Mortgages April 2011

Thursday, March 31, 2011

Any questions: Mortgages April 2011

My wife and I are planning to move to France. In order to do this, we need to sell our house in Sussex and use the proceeds to fund our French home. However, if we can we would prefer to wait until - hopefully - the Pound strengthens against the Euro before we sell up. Is there any way we can arrange things so we can do this and still secure a French mortgage?

In a word, yes. But there are several things you need to consider beforehand. I would advise you to take out a mortgage with a French bank. Then you would not have to use Sterling, and if circumstances allow, you could rent out your Sussex property.

This approach would provide you with the means to cover your UK mortgage payments until the UK property market picks up again. You could then sell your UK property at a more favourable price than you're likely to achieve in the current market. It is advisable for UK residents to keep a foothold in the country by renting out their first property to tenants. You then have a base to return to if the move to France doesn't work out as planned. It is less of a long-term commitment than selling up completely.

In addition, UK rental income can be transferred directly to pay the French property mortgage (or service an existing UK mortgage).

It is also important to be aware of the financial criteria you'll need to meet to secure a French mortgage. You will need to provide evidence of what is defined as 'consistent income', either from a permanent role or through self-employment. Proof of income needs to be demonstrated for at least two consecutive years if you are self-employed and for three months if you receive a salary, before an application will be considered. The fact that you already have a UK property with accumulated equity will also work in your favour.

When selecting a French mortgage, look for a mortgage without a redemption penalty. This will ensure that if you subsequently pay the mortgage off in its entirety (for example by using the equity you receive through the sale of your UK home), you will not be subject to a charge for doing so.


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