Friday, 17 April 2015

Friday, 17 April 2015

How the Mortgage Credit Directive may affect (or may not) affect your property purchase in France


The Telegraph website today published an article "New EU rules threaten overseas holiday homes" outlining the fact that from next year it might be difficult for British workers with foreign incomes (or those wanting holiday homes abroad) to get a mortgage.  This is as a result of some new regulations, the 'Mortgage Credit Directive', being introduced by the EU.

At Allez-Francais we are quite fortunate that most of our clients are cash buyers, and less than 10% of them require mortgage finance. Amongst those, some will be raising a mortgage against their UK property, so that loan will be in Sterling in any case. Where this potential legislation could cause problems, is of course UK buyers looking to finance a loan in France using a Euro mortgage.

With falling house prices, and a stronger £ giving very favourable exchange rates, cheap French mortgages rates are luring many British buyers across the Channel at present.

I am not sure how legal this proposal will be. How can it be right to prevent someone working in Europe, taking out a mortgage via a European bank? This could be another example of an “illegal act”, such as the “tax” levied by François Hollande’s Government via Social Charges of Capital Gains Tax.

At the moment, there is a lot of detail not known about the regulations, and I suspect that there will be quite a few changes from those outlined here.

Cheap French mortgage rates are luring many British buyers across the Channel
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