Answer Happy

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You are contemplating buying a 4 bedroom apartment in Lyon (France). The property is on the market for €900,000. You currently live in a one bedroom flat near Gare de Lyon in Paris. You own 40% of the flat and have been repaying a mortgage on this property for the past 10 years. The current market value of the one bedroom flat is €600,000. The down payment for the Lyon apartment is 15% of market value but you only have €100,000 in your bank account. Discuss examples of switching real options that will enable you to secure a mortgage on the Lyon apartment and move to Lyon, while still repaying your other mortgage on the Paris flat. Discuss the key value drivers of your real switching options.