What is the impact of the fall in sterling against the euro for U.K. Buyers of French residential properties?
With the pound falling 16% against the euro since the Brexit referendum result, many potential buyers of French property are understandably reluctant/hesitant to crystallise the loss in the value of the pound when committing sterling to finance their house purchase in France.
There is a powerful argument for holding onto your sterling and borrowing from French banks at record low interest rates in euros.
Matt Frost, Director of one of the leading non- resident mortgage brokerages in France, says that “We now have interest rates lower than at any time since the stone-age!”
“Why not keep your sterling in the UK earning interest and borrow in euros at record-low interest rates with the option to pay back the loan partially or wholly if and when the pound recovers.”
Case Study:
Mr. and Mrs. Jones want to buy a property in the South of France for 500.000 €
They transfer 100.000 € as a down-payment and finance the rest using a French mortgage to produce the following financial plan:
Purchase price: 500.000 €
Down payment: 100.000 €
Loan Amount: 400.000 €
Fixed Rate: 2.5%
Monthly payment: 2.120 €
Term: 20 years
Mr. and Mrs Jones thereby keep there cash in the U.K. and borrow 400.000 in euros at a fixed rate over 20 years, keeping their sterling liquid and taking advantage of the current record-low rates offered by French banks.