With the European base rate, the EURIBOR, consistently lower than its UK counterpart, UK residents with property on the Continent are looking to repay all or some of their UK mortgages using cheaper finance secured on their holiday homes.
In general European lenders are unaffected by the credit crunch and have maintained a range of mortgage products whereas in the UK it has become difficult to secure mortgages with lenders withdrawing their products from the market and increasing their rates and fees.
Tens of thousands of Brits have funds tied up in overseas property that was purchased using savings or have very small mortgages.
Meanwhile there are a range of solutions for overseas property owners who need to raise cash with a range of mortgage providers. French companies, for example, are currently offering re-mortgages at starting rates of 4.4% and with small or no arrangement fees.
Overseas finance specialist Assetz Finance has seen a 40% increase in enquiries for re-mortgages on properties in France and Spain since the beginning of the year.
'Repaying more expensive UK debts is not the only reason overseas property owners choose to secure mortgages and release equity from their foreign properties,' said Katy Hepworth, Overseas Mortgage Manager of Assetz Finance.
'Many borrowers use the funds for projects such as further property purchases and renovation. In the past UK home owners, with European holiday homes, have tended to use mortgages secured on their home to raise funds that they require for these types of projects, forgetting that their European property can also be used for this purpose,' she added.
