WITH the drop in the value of the pound and property market, house prices in the UK are starting to look reasonable. Is it possible to get a mortgage in euros from a French bank to buy property in the UK with a view to letting it out and continuing to live in France?
Lenders in France are unable to secure finance against property in the UK, in much the same way that banks based in the UK cannot arrange mortgages to buy a French property.
Familiar British high street banks who do arrange French mortgages – such as Barclays and HSBC – do so through their French-based banking networks.
However, there is another option for those looking for finance in euros, which has been increasingly exploited by those Britons who purchased a French property with cash from selling or remortgaging a UK property.
With the pound weakening to historic lows against the euro, many French property owners have shrewdly taken the opportunity to raise a euro mortgage against their property and repatriate the proceeds back to the UK.
The weakness of the pound therefore works in the borrower’s favour as funds are transferred back across the Channel.
The resulting cash which becomes available in Sterling can then be used for that UK property purchase, or even to pay down outstanding debts in the UK.
If you are thinking of letting out the UK property, it is important to remember that the French lender may not consider this potential rental income when calculating your eligibility for the loan.
This will depend principally on your existing financial profile, in particular how your income is affected by your monthly debt commitments, and where the property you are purchasing is situated in the UK.
A French mortgage broker will be able to guide you through this process and explain in detail all the options available.
Not all French banks will be able to raise money against your French property in this way, and those that do differ greatly with regards to the flexibility of both their products and the criteria imposed.