Buying a property in the South of France

The French buying process – Important information

The process of buying any type of property or land in France is strictly regulated. HomeHunts are here to offer advice through every step of this process but you need to know what to expect ahead.

Firstly 1 you should decide how you will buy your property.

There are three 3 options:

1.

Buy for cash - a straight forward option, but once capital has been invested in a French property it can be difficult to release equity.

2.

Re-mortgage your main home to raise the cash - again, a straight forward option and one that doesn't involve you having to deal with any French banks, but you will probably find that the interest rates charged by lenders in other countries may be higher than interest rates in France

3.

Finance your property with a mortgage from a French bank or lender.
Prepare yourself for the initial costs
Whether you are buying for cash or with a mortgage, there are some costs you are going to have to fund yourself.

The Deposit - On the day you sign the Compromis de vente (the sales agreement contract) you will be required to pay your deposit, usually 10% of the purchase price for older properties. It is advisable to pay your deposit cheque to the notaire or agent who is representing you and not to the vendor. The deposit is held by the notaire/agent until completion.

Notaire fees - For an existing property, be prepared for 7-8% of the purchase price as the cost for the legal fees. For a new build property, assume 4% of the purchase price. In addition to the notaire fees, there will be the land / property registration fee which varies from region to region. Notaire fees can only be included in the mortgage for French tax payers. If you pay tax in another country, you will have to fund the notaire fees yourself.

Agency fees – The agents selling fees are usually between 5% and 10% and this amount is normally built into the sales price. The vendor usually pays the agents fees from the sales proceeds but there is no hard or fast rule. The important thing to make sure that the price stated by the agent is the price you pay, your HOMEHUNTS consultant will be able to confirm this for you. If you are raising a mortgage you can include these fees in the loan if the agency fees are stated in the Compromis de vente.

Mortgage deposit: The minimum amount you need to provide as your deposit for a mortgage depends on your nationality, the country you live in and where you pay income tax.

For tax payers in France it is possible to arrange a 100% mortgage. For UK and EU residents and tax payers the minimum amount of deposit is 15%. For residents and tax payers in non EU countries, the minimum deposit is 20%

Arrangement fee: All of the French banks and lenders charge arrangement fees. Most charge 1% of the amount of the mortgage, many with a ceiling limit of 1500 euros, but it is advisable to check because they do differ from each other and some do not have a ceiling limit at all, so you may end up paying 1% of the total mortgage.