Specialist UK regulated brokers Offshoreonline.org  are one camp who do not necessarily follow this view. Managing director Tim Harvey comments, “Whenever we see ordinary clients thinking they can speculate successfully in the currency markets, we usually advise against this, as by and large, they simply do not have the experience to be able to judge the risk. Currencies can and do move very quickly, but mortgages are not that flexible and drawing down or repaying capital can take far longer, by which time any advantage may have passed.”

In France, many borrowers have fixed rate loans or products with an automatic penalty of up to 3% of the loan amount for early repayment. These penalties usually last for the life of the loan. In addition, the new lender will levy a typical administration fee of 1%, capped at 1500 euros and the legal costs can add 4% to the transaction. Valuations are becoming more common too and this only adds to the costs.

For Italian homeowners abroad, the question is one of time. With many banks having withdrawn from the foreign buyer market, if a client wishes to remortgage, they will by and large have to go to Italy and negotiate with a local branch. The deals on offer vary considerably and there is always scope for negotiation with Italian banks.

Tim Harvey ends, “Choosing the right mortgage in the first place is probably the most important aspect of a European purchase. If a client is dealing with a reputable lender, we can generally negotiate an extension to an existing facility at a much lower or no cost. This can achieve the same aims, i.e. capital release, but avoid much of the cost.”

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