Overseas property investors hoping to profit from euro mortgages

An increasing number of British investors buying second homes in Europe are taking out euro-denominated mortgages in order to beat the poor exchange rate. This not only allows them to take advantage of cheap interest rates, but could potentially save them significant sums of money if, as experts predict, sterling appreciates against the euro over the next few years, as this will reduce the sterling cost of the property purchase.

Clare Nessling, Conti's operations director, says: "A euro mortgage could be a good idea, even if you thought you didn't need one. As you'll only need to transfer money for your deposit and fees for now, it minimises the amount of sterling you have to exchange for the property purchase. Even if you're lucky enough to be a cash buyer, it may be worth taking out a mortgage until the exchange rate improves, at which point you can pay it back, and ultimately reduce the price you pay for the property."

There are a number of other benefits associated with euro mortgages. If, for example, you're going to rent out your property, having a euro mortgage means that your rental income and mortgage repayments are in the same currency. The big advantage being that the balance between income and outgoings on the property are not subject to exchange rate fluctuations, and it's a more stable situation than servicing the mortgage repayments with sterling.

A euro mortgage also allows you to benefit from European interest rates, which are often lower than sterling rates. Even a small difference could potentially save you a lot over the lifetime of the mortgage. The fees on some euro loans can also be substantially lower than on some sterling mortgages.

And in general terms, one of the biggest advantages of an overseas mortgage is that the lender, similar to those in the UK, will do its own checks on the property, ensuring that a proper legal title exists, that the property is registered in the buyer's name and that a valuation of the property takes place. Banks will also check other issues such as planning permissions and building licences.