With British people yearning for a second home, holiday home or oversees property investment, leaseback properties are becoming a favoured option. A property purchased in France which can then be let for the use of students, the elderly or business people is a wise investment as once the mortgage is paid, you are then free to use the property as a holiday or retirement home, having reaped the rewards that accompany a leaseback property.



Leaseback properties in France have many financial benefits. Tax deductions are made, not only on that business but also on any on-going tax payments in the UK. On top of that, they are easy to come by. Due to a shortage of accommodation in France for these groups of people, the French government are very keen for foreign investors to contribute towards the countries businesses.

Not only are there tax benefits to buying a leaseback property in France but you also have the added enjoyment of knowing that you can borrow mortgage funds from a French bank that have lower interest rates than a British financial institution. But is it safe?

Buyers can be a little wary of foreign banks, simply because they dont know much about them. For the really nervous, one of the top British banks have now opened a branch in France and are offering an English speaking service to those looking to invest in French property. They will run on the same financial scale as France and people may be a little more trusting of these.

However, there is no more risk in taking the plunge with a French bank. Their criteria for running their finances is pretty much the same as the British method. Applying for a mortgage at a French bank requires the same proof of income, the same identification, the same business plans and the same sort of deposits as any British bank.

The only difference will be that British banks decide their interest rates through the Bank of England whereas French interest rates are decided by Euribor and Eonia rates. This is a good thing! The French interest rates are more often than not lower than the UK rates so your tax benefits on a leaseback property will be added to with lower interest rates on your home loan. A win/win situation.

So what is the Euribor and can it be trusted? Well, take a look at the facts. When the Euro was introduced as the standard currency in all participating countries, and fifteen of them have opted in so far, a benchmark was needed to set rates for Europes new currency. This was an entirely new currency and as such, required its own set of standards.

Hence, the Euribor, or Euro Interbank Offered Rate. This rate is based on the average interest rates at which a panel of 50 different European banks borrow from one another. Thats 50 different financial institutions all coming together in one united interest rate agreement. This is probably even more impressive than the British system and is the most important reference rate in the European financial market.

The Euribor sets the vases for the interest rates for all financial products throughout France and the rest of the European countries that use the Euro as standard currency. This includes mortgages, savings and interest rates. The Eonia is the effective overnight reference rate for the euro and is based on the average of all overnight unsecured lending transactions. This is a little less significant for property buyers as, with borrowing in most countries, your mortgage will be secured by your property.

However, it pays to familiarise yourself with the Euribor and Eonia before embarking on foreign investments to give yourself peace of mind.