Holiday Home Owners ....

Have some put their main home at risk for the sake of their holiday home ?

The overseas holiday home market has seen many people purchasing their dream properties in countries all over the world.

Being so close, France has been, and still is, one of the top choices for holiday homes. The ferries and Channel Tunnel have made access easy, but the introduction of low cost airlines has made travelling to the more unspoilt parts of France an affordable reality. It is hardly surprising that thousands of holiday homes have been bought.

Figures show that in 2003, some 26,000 properties in France (not including Iles de France region) were bought by British or Irish buyers. Over 27,000 in 2004, whilst 2005 saw a small fall in numbers at 25,300, but 2006 saw the numbers rise to nearly 31,000.

How did these people buy their dream holiday homes?

Over the past four years the number of mortgages financed by French banks has risen, with many British and Irish people taking advantage of the lower interest rates, but even in 2006 French mortgages accounted for only 21% of those property transactions.

It is thought that approximately 50% of British buyers re-mortgaged their main home in UK to purchase their holiday home in France.

With the recent rises in UK interest rates, many people are now facing substantial increases in the cost of their monthly mortgage repayments, and the number of mortgages in arrears, or house re-possessions are on the increase.

At the end of June 2007, the number of mortgages in arrears had risen to an estimated 125,000, whilst the number of property re-possessions between January and June 2007 had risen to 14,000.

How many people have put their main home at risk by re-mortgaging their main home for the sake of buying a holiday home for cash, and what possible solutions are available to them?

One option would be to put the holiday home up for sale and hope for a quick sale, but that in itself can be a double edged sword.

According to a national group of French estate agents, property prices in France rose by an average of 2.8% in the first half of this year. However there are differences between the regions, and some regions are showing a fall in property prices.

For those people who may make a profit on the sale of their holiday home, there is the hazard of incurring the cost of Capital Gains Tax.

An alternative solution for some people, is the Euro Switch mortgage.
An Euro re-finance solution for those homeowners in France, who raised sterling mortgages on their UK property, giving them the advantage of benefiting from lower interest rates in the Euro zone, and also restoring the equity in their UK property. It is a way of using the French property as security and preserves their home country assets, matching liabilities and assets in the same currency.

Please contact me if you want to know more ....