In 2016, interest rates of French mortgage reached all time lows, 2017 could be the perfect time to refinance an existing euro denominated mortgage loan.
You will find below some simple guidelines to determine whether it makes financial sense to explore refinance options.
1. If you own a house or an apartment in France with a value in excess of €1 million and your interest-only credit line has switched to capital repayment, you should explore options to move to a new lender offering an interest-only facility. A liability in the form ofa mortgage loan is an efficient way to reduce your exposure to French Wealth tax (ISF).
2. Remortgage to minimize the total cost of borrowing. To do so, it is important to look beyond interest rates and calculate all costs associated with refinancing a debt secured against a property (legal fees, early repayment charges and administrative costs)
As a rule of thumb, re-mortgaging will make sense and will save you money if:
- The rate of your existing French mortgage is 1% higher than the new rate you are offered;
- You are closer to the beginning than the end of your mortgage term
- Your outstanding balance is above €200,000
3. Remortgage to raise capital. If you have equity in your French property home, borrowing against your French property can be a very effective way of raising capital, to create a portfolio, finance renovation work, or repay existing debts denominated in dollar or sterling
4. Remortgage to switch to a fixed rate loan. The present low rate environment can be a perfect time to move from a tracker to a long term fixed rate mortgage.
If you would like advice on how to refinance your French mortgage, please get in touch.