Overseas buyers should move quickly to secure low mortgage rates

Savills Private Finance (SPF) International, the overseas division of the national independent mortgage broker, warns those considering buying or remortgaging on the Continent to move quickly as rates are tipped to rise next month.

The European Central Bank (ECB) held rates at 4 per cent earlier this month but an interest rate hike to 4.25 per cent is widely expected in September, even in the face of recent market turmoil. Since December 2005, the ECB has lifted its main rate by a quarter point eight times.

Miranda John, international manager at SPF, advises: ‘Anyone buying now or considering remortgaging should move quickly to make the most of current offers. Generally, overseas lenders set rates every month and many already confirm mortgage rates are set to increase by at least 0.2 per cent from next month.

‘As a result, fixed-rate deals are becoming more popular with overseas buyers, particularly where there is rental income as this can then be matched to the set monthly repayment.

‘It is possible to fix for long periods of up to 20 years but there are early repayment penalties during the fixed phase so this option isn’t for everyone. It might make sense for long-term investors though. In France, it is possible to get competitive long and short-term fixed options on a repayment or interest-only basis.’

Ms John continues with advice for those considering remortgaging their overseas property: ‘With the dramatic increase in international house prices over the past decade, it may be possible to unlock some of this equity by remortgaging your overseas property. If the money was originally raised in the UK - as a remortgage or further advance - it is likely to be more expensive than a Euro mortgage as UK rates are higher. Alternatively, you may have purchased the property using savings at a time when overseas finance was less readily available to foreign property purchasers.

‘Rates for remortgaigng can be higher than new purchases: speak to an independent broker with international expertise, such as SPF International, for advice.’