Euro mortgages bring tax and interest rate benefits

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by Gill Montia

Overseas property purchasers should consider taking out mortgages in euros.

According to Blevins Franks, the independent financial services group, euro mortgages are to be recommended because they benefit from the stability provided by the European Central Bank, which only this week injected €348.6 billion into the wholesale money markets to ease inter-bank lending rates.

In certain countries euro mortgages can also make tax breaks available and Matthew Weston, overseas mortgages manager for Blevins Franks, points out that: “Most ‘established’ markets such as France, Spain and Portugal offer lower and more affordable interest rates than are currently available in the UK”.

Some French building societies are currently offering long-term fixed-rate loans at interest rates below 4.5%.

Mr Weston adds that: “A euro-denominated loan is perhaps the most popular choice for non-resident buyers. This is because many recognise that by arranging the mortgage in the country in which you are buying, you are effectively safeguarding your main UK residence and assets.”

For these reasons countries joining the eurozone can expect a surge in overseas property investment.

Cyprus and Malta are preparing to join the eurozone on 1st January 2008 and there is already evidence of increased interest in the property markets of both counties, from prospective UK purchasers and others.