Before travelling out to France you will need to have a good idea of your available budget. You should have finances in place to fund a deposit of 5-10% of the sale price of a property. The deposit is paid once the first sales contract, or compromis de vente, has been signed by both the buyer and vendor. This should be anticipated to be due within 2 weeks of your agreement to purchase the property.
As well as the sale price of the property you should take into account notaires fees and taxes when calculating your budget. In the case of resale properties, notaires fees and taxes generally amount to 6-7% of the sale price of the property. They are calculated on an official published scale which is used by all the notaires in France. The notaire generally retains 1% of the fees and the remainder is passed to the French government. The notaires fees and taxes are not due to be paid until the sale completes and they are confirmed by the notaire at the same time as the final balance. In the case of new-build or “off-plan” properties, there is a tax break which reduces the fees and taxes to 2-3% of the sale price of the property. This is also applicable for any properties that are aged 5 years or less. Please note that if you sell your new build property within 5 years you may be required to refund the initial tax break you received.
If you are funding your purchase with a French mortgage there will be a mortgage registration fee. This varies according to how the French loan is secured. The company supplying your mortgage will confirm this fee to you before you agree to the mortgage. Overseas buyers can expect to borrow up to 80% of the value of the property through a French mortgage. Most banks will not lend on more than 80% unless you are making a full time move to France. Some banks or mortgage lenders will also lend on the notaires fees and some will provide buy-to-let loans. French mortgages are generally more competitive than those obtained in the UK, with lower interest rates. Overseas buyers can now borrow over longer periods, so it is always worth comparing the cost of a French mortgage to an offer from any UK lender.
Mortgage brokers can help you research the right mortgage; however you should ensure that you are aware of the fees they charge for their services. Frequently the intermediary at the brokers does not provide the personalised service you require and delays and mistakes arise. When you are using a mortgage to fund your purchase timings are important. The first sales agreement (compromis de vente) will list an agreed schedule for the mortgage application and if you do not meet the dates in the contract the sale and your deposit are at risk. By dealing with a local mortgage representative you can be reassured that they are in contact directly with the notaire handling your sale as well as your estate agent to ensure that the application proceeds smoothly. It is also useful to deal with a contact who knows and understands the local property market.
We have a number of partnerships with local banks and mortgage contacts, who are able to discuss these options with our clients. Our partners all speak fluent English and are able to provide all the relevant mortgage paperwork in English. They are happy to meet you whilst you are in the region to discuss the details face to face, alternatively they can also liaise via the telephone or email if you have already returned to the UK. Please visit the Resources section of the website for more details.
Once you have made the decision to purchase a property you may need to buy and transfer money between the UK and France. You can use your local bank, although with the commissions and transfer fees charged this is generally seen as an expensive way to do it. We would recommend that you speak to a foreign exchange specialist to handle the transfers, as they are able to advise on the best times to buy currency and some charge no fees, commissions or transfer costs for their services. If you need to make regular payments, to cover French mortgage repayments for example, a currency specialist will be able to fix a euro exchange rate over a 12 month period so you know exactly what your sterling payments will be regardless of any market fluctuations. We are able to recommend foreign exchange specialists who have regularly worked with our clients,