I have the cash to buy my French property, why should I use a French Mortgage?
If you have sufficient cash to buy your French property, the best financial strategy might not be to avoid using a French mortgage. Here are the main reasons why:
- Reduce the risks on currency exchange: the exchange of your currency asset against Euro may not be as favorable when you purchase your property as it should be. By taking a mortgage in Euro, you spread your payment over time instead of moving the full value at once, which reduces the risk. Then, when the exchange rate improves, you can choose to terminate early your French mortgage.
- Reduce your taxes on rental income: you can reduce your amount of rental income declared to the French tax administration by the interest paid on your French mortgage. This only applies to mortgages subscribed in French banks.
- Take advantage of the low French interest rates: As a combination of the low points of the three month Euribor (European Interbank offered rate), on which most French variable mortgages are based, and the economic outlook forcing investors to seek the safest long term deals and contributes to have trust in the French government bonds, French interest rates have historically been one of the lowest in Europe.
- Combine your mortgage with a saving program: Your overall return on investment will likely be higher by opting for a French mortgage and retaining the rest of your capital in local investments. Our experts will help you to find the right combination.
- Increase your budget: a French mortgage will help you to improve the size, the location or the style of the property.
- Reduce you French wealth tax: the French wealth tax (Impôt Sur la Fortune) is an annual tax on the net value of your assets (property, cash and investments), applicable over 1,3 million Euro in asset value. The property values are reduced by the outstanding capital of your French mortgage.