Baydonhill plc, the FX, overseas property and mortgage specialist, today urges British property investors to consider Euro mortgages as a potential alternative to raising equity on their UK properties in order to pay for second homes in Europe.
Lucie Jeffery, International Mortgages Manager at Baydonhill, said:
“Buyers seem to be sitting on their hands, hoping the pound strengthens against the euro in the next few months – but that’s not looking likely. But there is another option available to them – the Euro mortgage.”
“There are a range of advantages when you choose a Euro mortgage. The majority of your sterling can be left in the bank as you can take out a Euro loan with maximum LTV of 90% in France and 80% in Spain, Italy and Portugal. You’ll only need sterling for the initial deposit, notary fees and valuation fees.
“There are some great Euro mortgages on the market now. Many products are now without early redemption penalties, which means you have the option to redeem the loan at no charge after the first year, should the sterling have significantly have strengthened by this stage. Also, due to lower base rate and therefore lower repayment rates, monthly euro loans will be significantly less than they would be for the same mortgage in the UK
- A Euro mortgage, for a term of 20 years (with no early redemption penalties) exchange rate £1 = € 1.25, could look like this:
- Property Cost: £ 120,000
- 80% LTV: £ 100,000
- Deposit: £20,000
- Other fees: Notary fees, valuation fees
- Monthly payments at a rate of 4.305% = € 777 = £ 499 per month
Lucie Jeffery continues:
“Eligibility in the Euro Zone is not calculated in the same way as in the UK, where income multiples are used. Debt-laden buyers may have problems obtaining Euro loans, as the standard eligibility criteria states that total monthly commitments (including total mortgage repayments and or/rental payments and any personal loans) may not exceed 33% of total monthly income. All loans are full status meaning that applicants will need to provide full proof of all income and outgoings when submitting an application.
“That said, many international lenders seem to be loosening their grip on required documentation, opening up their products to a greater market. This is in stark contrast to the UK situation (and does not include the Spanish market, which has seen withdrawal of several products, especially high LTV products).”
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About Baydonhill
Baydonhill is the UK's only publicly listed foreign exchange and overseas mortgages specialist. Based in London and established in March 2000, the business prides itself on a strong track record of exemplary customer service. www.baydonhill.com
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