Repayments for some British homeowners in Europe got cheaper recently, following the European Central Bank’s cutting of its key interest rate by 0.25 per cent to 0.75 per cent.

 

While anyone with a tracker mortgage in Spain or France might be celebrating the rate cut, buyers and other existing owners should be aware of a general trend amongst European banks not only to have tighter lending conditions but also to make it more difficult to release funds from a mortgaged property, especially if the funds are for repatriating to the UK.

“Release of funds in Spain is tight,” confirmed Ros Martlew of overseas mortgage specialists Viva Costa International. “And in France it is difficult too. If the client wants to release monies to renovate their existing property in France then the monies are released to the notary and the builders, who must be French with the correct French insurance. They must then bring the invoices to the notary and the money is released, meaning the clients do not actually have control over the money in the same way as previously.”

There are still banks that will release funds on a French property to buy a UK property but generally funds will go directly to the client’s UK solicitor, who will have had to previously send a letter to the bank in France confirming the property purchase transaction.

Anyone considering a property purchase in Europe with a loan should enter their mortgage agreement with caution and never stretch themselves financially. “Bear in mind that you’ll be entering a mortgage agreement when interest rates are at record lows in Europe,” adds Richard Way, editor at The Overseas Guides Company. “Think long-term and budget for when mortgage repayments could rise in the future.”

For more information about moving abroad, visit The Overseas Guides Company website.

When moving abroad or buying overseas property, using a currency exchange specialist rather than a bank to transfer your money could save you thousands. Smart Currency Exchange can help you do this – for more information download their free guide by clicking here.