A 100% French mortgage seems to be the option of sense for the next four years due to the weakness of Stirling for UK buyers of French property. The pound has lost more that a quarter of its value against the Euro in the past 2 years and as the value of Stirling continues to fluctuate, parity with the euro cannot be ruled out. So for those looking to buy French investment property of buy a dream home, what does the future hold for Stirling? According to a report by accountants Ernst and Young, the pound is likely to remain weak as international investors decline to invest in the UK in the face of the UK's growing budget deficit. This lack of investment will keep the economy slow and keep interest rates in the UK at the low rates currently being experienced.
The news is not all bad, though, in UK as a continued period of low interest rates provides an increase in the disposable income for those on variable rate mortgages. The weaker pound also offers succor to the manufacturing and tourism industries which are gradually seeing the benefits. Indeed, due to a peculiarity of the UK gilt markets for government borrowings, the situation for UK in the short to medium term seems good as the maturity for UK governments portfolio of bonds is 14 years compared to half that for other major economies. So, providing the politicians can find a sustainable way to reduce the overall deficit, investors from the UK can operate with confidence knowing that low inflation and interest rates appear to be here to stay in the short term.
The availability of finance in France for French mortgages for all property types means that the Pied a terre in Paris, Maison de charactere in the Dordogne or Chalet chaleureux in the Alps is still at your finger tips fulfil that part of your life's plan. The added benefit of course being that an asset denominated in euros is an extremely useful financial product which can be used judiciously at various stages in the financial cycle to great financial advantage. Those people who bought in France over the last decade have not only seen good capital growth in the property, but also have been able to pay off large chunks of their French mortgage when the pound was strong thus building up the equity in the property. These lucky people are now in a position to release that equity in euros and convert into pounds with an increase in the value of over 25%. These funds can then be used to pay off a UK mortgage in preparation for when the pound will become strong again. Over the course of a few economic cycles, it would be entirely possible to pay drastically reduce the overall cost of both the UK and French mortgages. In this way we can see that owning a property in France wuth a French mortgage, is not only part of dream lifestyle but also a very sensible investment as part of a balanced portfolio.
The news is not all bad, though, in UK as a continued period of low interest rates provides an increase in the disposable income for those on variable rate mortgages. The weaker pound also offers succor to the manufacturing and tourism industries which are gradually seeing the benefits. Indeed, due to a peculiarity of the UK gilt markets for government borrowings, the situation for UK in the short to medium term seems good as the maturity for UK governments portfolio of bonds is 14 years compared to half that for other major economies. So, providing the politicians can find a sustainable way to reduce the overall deficit, investors from the UK can operate with confidence knowing that low inflation and interest rates appear to be here to stay in the short term.
The availability of finance in France for French mortgages for all property types means that the Pied a terre in Paris, Maison de charactere in the Dordogne or Chalet chaleureux in the Alps is still at your finger tips fulfil that part of your life's plan. The added benefit of course being that an asset denominated in euros is an extremely useful financial product which can be used judiciously at various stages in the financial cycle to great financial advantage. Those people who bought in France over the last decade have not only seen good capital growth in the property, but also have been able to pay off large chunks of their French mortgage when the pound was strong thus building up the equity in the property. These lucky people are now in a position to release that equity in euros and convert into pounds with an increase in the value of over 25%. These funds can then be used to pay off a UK mortgage in preparation for when the pound will become strong again. Over the course of a few economic cycles, it would be entirely possible to pay drastically reduce the overall cost of both the UK and French mortgages. In this way we can see that owning a property in France wuth a French mortgage, is not only part of dream lifestyle but also a very sensible investment as part of a balanced portfolio.
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