With French mortgage rates dropping, now could be the perfect time to buy your dream ski property.
Lenders are competing for buyers, offering more flexible financing and even special deals, such as promotional rates as low as 2.99% for loans up to €500,000. If you’ve been considering a chalet in the Alps, these lower borrowing costs could make your purchase more affordable.
But while a good mortgage rate helps, there’s another financial factor you can’t afford to overlook – currency exchange.
The euro has surged in value in recent weeks, and if you’re transferring funds from another currency, the strength of the euro could push up the cost of your purchase.
Without careful planning, you could end up paying thousands more than expected.
Mortgage rates are falling, but for how long?
If you’re taking out a mortgage in France, you’ll benefit from the recent drop in rates. Right now, the average mortgage rate stands at 3% for a 15-year term, 3.2% for 20 years and 3.4% for 25 years. Some buyers are even securing rates as low as 2.7% for 15 years and 2.9% for 25 years.
With lenders competing for business, you might be able to negotiate an even better rate.
However, there’s no guarantee these lower rates will last.
While the European Central Bank is expected to announce a further interest rate cut, economic uncertainty and rising notaire fees – now adding an extra €500 per €100,000 spent – could make property purchases more expensive in the future.
How exchange rates could absorb your mortgage savings
You may have found the perfect chalet at a great price, but if you’re buying in euros while earning in pounds, the actual cost can shift dramatically due to exchange rate fluctuations.
The euro has just had its strongest weekly gain in 16 years, rising 4.6% against the US dollar and strengthening 1.7% against the pound in just a few days.
Let’s say you’ve found a chalet in the Alps for €1 million. Just a week ago, when the exchange rate was 1.21 GBP/EUR, that property would have cost you approximately £826,500. Now, with the exchange rate at 1.19 GBP/EUR, that same chalet would cost you £840,000 – an increase of £13,500 in just a matter of days.
This additional cost could easily outweigh the savings you make on securing a better mortgage rate. For example, negotiating a 0.3% lower mortgage rate on a €1 million 20-year loan could save you around €150 per month. That adds up to around €36,000 over the course of the loan – but a shift in the exchange rate could cost you that amount (or more) upfront.
If the euro continues to strengthen, the cost of regular mortgage payments and other ongoing expenses, such as property maintenance or ski resort fees, could also increase.
Without a plan to manage currency risk, you might find that your dream ski chalet costs far more than you originally budgeted.
How Smart Currency Exchange can protect your money
If you’re buying a ski property, working with our currency specialists at Smart Currency Exchange can help you manage your finances more effectively and avoid unexpected costs. We can offer:
Lock in a favourable exchange rate for future purchases with a forward contract
Make quick on-the-spot transactions at the best available rate with a spot contract
Use a regular payment plan to help manage mortgage repayments and ongoing expenses in France
You wouldn’t buy a ski property without checking the mortgage rates first, so don’t leave your exchange rate to chance. By securing the best currency strategy, you can protect your investment and make sure your dream chalet stays within budget.
Talk to our currency specialists at Smart Currency Exchange today to ensure your French property purchase stays cost-effective and stress-free.
To get the process of buying your ski property underway, why not take a look at our handy ski property buying guides? They lay out the buying journey step by step to make the process as smooth and hassle-free as possible.
