This could be a good time to refinance

Sep 15, 2020

Last month I shared a blog post about investing in property and how it’s often seen as a very attractive option even during more trying economic periods.

There’s absolutely no doubt that the property market in the Alps is doing well. This is clearly excellent news for those who are looking to buy or sell in the area. However, existing property owners may also be able to benefit.

There are a number of reasons why now is the ideal time to think about refinancing your investment property.

Why might now be the right time to do this?

Interest rates have fallen over the course of the year. This, of course, creates favourable conditions for those investing in property, as mortgage providers are likely to be offering more favourable rates.

In Britain we’re used to fixed mortgages that run for a period of 2-10 years and don’t often consider renegotiating during the course of a fixed period.

However, French mortgages often have much longer fixed periods, sometimes as long as 20-25 years. If you have a mortgage like this on your property in the Alps, you’re likely to be subject to a much higher rate of interest than what’s currently on offer. As French mortgages have much longer fixed periods, it’s more common for them to be renegotiated mid-term.

Seeking to refinance while rates are this low could mean fixing a much more attractive rate for the remainder of a long term. Even a rate change of just 0.6-0.7% could translate to a significant saving.

Where should you start?

If you decide to go ahead with refinancing your French mortgage, broadly speaking, you’ll have two key choices.

You can either:

  1. Renegotiate with the current mortgage provider
  2. Apply to have the mortgage repurchased by a new lender

Both these options can result in better interest rates for you, which means your investment will cost less over time.

Is there anything else you need to keep in mind?

Whichever refinancing option you choose, it’s likely the process won’t be straight-forward. Renegotiating is likely to be quicker and involve less paperwork than having the mortgage repurchased, but that’s not to say it’ll all be sorted in one phone call.

You’ll also need to make sure you’ve explored all the charges you’ll be subject to during the process. Whether you’re renegotiating with your current lender or transferring to a new one, there will no doubt be administration charges involved. You may also be subject to early repayment fees.

In many cases, the cost of these charges will be more than covered by the savings you make by refinancing. It’s important to carefully run the numbers of your individual situation to make sure this is a worthwhile exercise for you.

Where to get advice

If you think refinancing could be the right choice for you at this time, why not get in touch? I’ll be happy to help you explore your options and ensure you get expert advice on your side.