The availability of finance when buying in Europe varies considerably from country to country. Brexit particularly affected British buyers when a number of banks stopped lending to anyone resident in the UK and not all European lenders consider residents outside the European Union (EU). Of the banks that target a more international market many prefer to work with brokers. 

One of the main lenders in France will only accept applications from a small number of recognised brokers so it is not possible to apply directly for a loan. It is usually possible to find solutions for expats who are European nationals working in Hong Kong, Singapore, the US and the UAE. The percentage of the total loan (the loan-to-value or LTV) to be borrowed can be generous – up to 80% in France – but the property must be in a prime location and the minimum loan is €300,000.

Spanish and Portuguese banks have demonstrated an eagerness to offer finance to international clients resident in and outside the EU. High-street banks are prepared to lend up to 60% LTV to residents outside the EU, while 70% or 80% may be achievable by EU residents. Mortgages are only available on a repayment (capital and interest) basis and long-term fixed rates are the preference in France, providing security from rate volatility. A French mortgage is therefore always a long-term commitment as remortgaging may not be available and where it is, there are legal costs and possibly early repayment charges too.

Across Europe, mortgages are virtually always on a repayment basis but there are variable options as well as short and long-term fixed rates in most countries. Competition between banks keeps pricing attractive but mainstream lenders expect purchases to be in personal names and where a company purchase may be possible, different rates and terms usually apply. The UK mortgage market is incredibly flexible, and property is an asset that can virtually always be used to secure finance. This is not the case elsewhere and buyers should be aware that taking a mortgage when buying a property may be the only chance to do so. Capital raising – looking to release funds a few years after purchase – is exceptionally difficult in Europe.

For loans of over €3 million, many owners opt for a private bank mortgage. These lenders understand more complex revenue based on assets rather than simply income and also have far greater flexibility on age. Unlike local lenders, they accept a wider range of ownership structures. Mortgages tend to be on an interest-only basis on a five-year renewable facility with the loan repayable at maturity, renewing is not guaranteed. High-net-worth individuals often find they do not fit the rigid mould of European high-street/retail banks’ criteria so are more naturally private banking clients, but the lending always requires a wider relationship with the bank and taking out only a mortgage is not an option. Generally, the standard requirement is for a minimum of €1m to be invested with the bank to qualify for a loan. For clients with higher value property there is the added consideration of a mortgage offsetting any Wealth Tax such as those payable in France and Spain.

There are encouraging signs for the future with lenders expecting further interest rate reductions this year. It is always worth considering a European mortgage as rates compare favourably with those charged on other types of finance, as well as the potential tax benefits. In addition, a currency mortgage in euros will match your asset and liability. Speak to a broker, such as ourselves, and we can help ensure you have the complete picture before you buy so that you can secure competitive finance in what is a narrow window.

Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Changes in the exchange rate may increase the sterling equivalent of your debt.