Mort­gage memo

French Property News - - Expert Advice -

French mort­gage en­quiries from Bri­tish buy­ers are up by al­most 30% this year at bro­kers In­ter­na­tional Pri­vate Fi­nance.

Founder Fiona Watts says: “French banks have con­tin­ued to assert that they will still be lend­ing to UK buy­ers once we have left the EU but we be­lieve many clients feel more com­fort­able know­ing they have se­cured their fi­nances be­fore los­ing their EU cit­i­zen­ship.

Our savvy clients have re­alised that even if they could buy their French bolt­hole in cash, it makes more fi­nan­cial sense to keep their ster­ling liq­uid and bor­row in eu­ros (at ex­tremely low rates – around 2% fixed for 20 years on a re­pay­ment ba­sis). If the ex­change rate re­cov­ers, they can then use their sav­ings to re­pay their mort­gage in full, sav­ing thou­sands of pounds on the orig­i­nal pur­chase price.”

In­de­pen­dent fi­nan­cial adviser Tony Del­valle, of the Spec­trum IFA Group, said the ref­er­en­dum re­sult had sep­a­rated the se­ri­ous buy­ers from the browsers. “And with cen­tral banks unan­i­mously cau­tious on the pace of quan­ti­ta­tive tight­en­ing, buy­ers still have ac­cess to com­pet­i­tive and flex­i­ble mort­gage fi­nance,” he said.

Cur­rency cor­ner While the GBP/EUR ex­change rate spent the first half of 2018 trad­ing around €1.13/€1.15, July saw the pound take a bat­ter­ing as po­lit­i­cal ten­sions, Brexit un­cer­tainty and dis­ap­point­ing UK data all took a toll, says Laura Par­sons, of TORFX. “The pound fell to lows of €1.11 – down 4 cents from the year’s best lev­els. The de­cline meant any­one look­ing to pur­chase prop­erty in France would get fewer eu­ros for their pounds than they would have at the start of the year, but it is pos­si­ble that GBP/ EUR could bounce back be­fore the end of 2018. Clar­ity on Brexit and pos­i­tive progress in ne­go­ti­a­tions would be pound-sup­port­ive, while higher UK bor­row­ing costs could also send ster­ling higher.”

Reaz Rah­man, se­nior dealer at Cur­ren­cies Di­rect, says buy­ers hop­ing to cush­ion them­selves from cur­rency fluc­tu­a­tions could con­sider us­ing a for­ward con­tract to fix the cur­rent ex­change rate for up to a year ahead. “While this means you won’t be able to ben­e­fit if the ex­change rate strength­ens, it does mean your funds will be pro­tected if it sud­denly falls,” he said.

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