Should I invest my savings in a French property?

Q: I have around £30,000 in savings with Nationwide. It's not earning much interest at the moment, so I am thinking about buying a house in France. Is this a good idea?

If so, how do I go about buying property in France?

David Hollingworth is a mortgage expert at London & Country Mortgages in Bath.

A: There's always going to be some risk in investing a lump sum in a property.

If you plan for the property to be let to generate income, there is a risk that you will not attract the demand from tenants or holidaymakers that you expect. Alternatively, you may be hoping to use the property as a holiday home and watch the property's price rise. However, there is always a possibility that the property's value will fall.

You need to understand what you require from your investment so that you can find a suitable property that is likely to deliver what you want. It is hard to be sure what will happen in the French property market, but it makes sense to do some intensive research on what prices have been doing recently, what yield you might expect if you are looking for a property to rent out and what regional factors might affect any property you might buy before you take the plunge.

You also need to look at the costs associated with buying the property, including the price of the legal advice you will need to make sure you avoid errors that can arise from language and legal differences.

Also look at how much it might cost to exit the investment if you want to sell it at a later date. The cost of withdrawing your investment can knock a big hole in any gains you might have made, particularly over the short term.

French lenders are likely to require a large deposit and you should seek specialist mortgage advice. Bear in mind that taking out a mortgage in euros will expose you to exchange rate fluctuation risk if your income is in sterling. If exchange rates move against you, the effective debt increases and the monthly repayments will rise.

Looking for more on property investment in on the continent? Read: French scheme suits long-term property investors.