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The lure of la vie Française

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Clare Nessling, director at the overseas mortgage specialist Conti, explains why France is a perennial favourite with UK property buyers.

France currently accounts for 37%of the mortgage enquiries we receive, up by 24% since 2008.

It has become an increasingly attractive choice, not least because of low interest rates, easy access from the UK, better weather, and good rental yields, but also due to some great property prices because of a slower market, which means that there are many motivated vendors who are open to lower offers.

And because the euro has become weaker against the pound, you can get more for your money at the moment.

It’s no wonder, therefore, that France is the most popular country being considered as a relocation destination, according to research from Lloyds TSB International Wealth, with 18% of respondents listing it as their first choice. In addition, a recent survey from currency company HiFX shows that as many as 35% of those interested in foreign property are opting for France, and Rightmove Overseas saw a record number of 2.9 million searches for overseas property during April, with Spain and France being the most popular locations.


Stable market

There’s no doubt that France represents relative stability amid the global downturn and the eurozone debt crisis, and this is primarily due to its financial system having been more cautious in the past. French people tend to buy property to live in, and not just for investment, and as it doesn’t have a large number of high-risk borrowers, there hasn’t been a dramatic increase in property supply, and this has kept the market very calm.

Consequently, it’s not experiencing the property price issues found elsewhere, particularly in Spain.

Existing French homeowners have, in fact, enjoyed solid capital growth since the late nineties. According to the Knight Frank Global House Price Index, there was a 4.3% annual increase in property prices in France for the last three months of 2011, compared with the same period the previous year.


Low mortgage rates

Although some lenders tightened up their lending criteria last year, due to the eurozone debt crisis, the country still offers the widest range of finance options and best available rates in Europe for UK buyers. And as it’s in a relatively secure situation, loan to value ratios are still high and it’s quite normal for clients to borrow up to 70% of the value of a property with an interest-only mortgage and up to 85% with a repayment mortgage.



Strength of sterling vs the euro

Another boost for British buyers has been the growing strength of the pound, which has risen against the euro to levels not seen since autumn 2008. At the time of writing, the euro/sterling rate is hovering around the 1.25 mark. Although this is still less than the good old days when the euro was launched and every £1 was worth €1.40, it’s much better than this time last year when you could only get €1.10. In property terms, this means that someone with £300,000 to spend now has around €45,000 more in the pot than they did a year ago. Not bad.


Sort your finances early

If you ’re one of many people thinking of buying a home in France, whether as a permanent residence or as a holiday bolt-hole, there are many reasons why you should get your finances sorted out as early as possible, even if you’ve not started looking at properties. You need to give yourself time to research the mortgage market, so that you can find the best possible deals and decide on things like whether a euro or sterling mortgage will be most suitable.

Arranging the financial side of things upfront also means you’ll know how much you can afford, and this is fundamentally important. At a time when securing a mortgage is no longer such a given, it’s vital that you determine how much you can spend. An ‘Approval in Principle’ (AIP), will do just that – it will tell you exactly how much you can borrow and what price range you can realistically consider when conducting your property search. It will also prove that you’re a serious buyer and could make you better placed to negotiate price. And it costs nothing.

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