These are very different to the UK and have caught out many a potential purchaser.
The general consensus is that you should allocate a pot of around 10% of your budget to cover most of your French property purchase costs. Whilst this is a realistic estimate, this pot will only cover the physical cost of purchasing your home. Therefore, in my article on The costs of searching for your French property I’ll be covering all the miscellaneous costs that are easy to forget about that you should also budget for.
This is why I’d actually suggest that allocating 15% of your pot to cover all costs is probably a safer way to go and will certainly take the pressure off further down the line.
However, here’s a summary of the main costs you’ll need to budget for in order to buy your French home:
Funding your house purchase
If you have to raise the funds by either a second mortgage, independent mortgage, bank loan etc then be sure this is in place before you start looking. What you think you’ll be able to raise and what you can actually, may be quite different.
Most French mortgage companies will ask for a deposit of at least 20 per cent for non-French nationals. Also, their criteria for calculating affordability is quite different to the way it’s historically been calculated in the UK, although in the UK in recent years it’s become far more like France in the way mortgages are calculated. However, for now you will still need to provide far more information as to the true nature of your financial situation that you would in the UK. We felt at one point that we might as well give them some of our blood and inside leg measurements!! We had never before had to divulge so much of our financial situation – and we only wanted a tiny mortgage!!
Oh and on top of the interest rate don’t be surprised if your lender insists on adding life insurance to your mortgage. This is often far more expensive than in the UK and can be a fixed requirement, regardless of how much life insurance you already have in place.
Immoblier (estate agent)
Normally Immobilier fees are built into the price of the property, so this element of your budget should already have been taken care of. However, this is not always the case and if you see the term net vendeur, this means that the agent’s fee is not included in the price and is therefore still to be added.
In this instance you’ll need to establish not only what their fees are but also who has to pay them. It’s normally the purchaser but is occasionally the seller. Immobilier fees are very high in France and will be anything from 5-10% of the property value.
You should allow between 7-8% of the property value in fees and taxes. These are paid to the Notaire and broken down roughly as follows:
Notaire fees: around 1% of the purchase price. However, this would be increased to around 5% if the sale is processed privately. Therefore, whilst this would be higher, you’d still in theory save due to a reduced property purchase price, based on the fact that there are no immobilier fees to inflate the purchase price further.
- Property transfer tax (similar to UK stamp duty) – This is around 5%, although only just over 0.5% for new builds.
- VAT (on new builds only) – 19.6% (note that the transfer tax is reduced in this situation).
- Additional fees (only if you need a French Mortgage)
- Mortgage arrangement fee – normally around 2%
- Mortgage registration fee – between 1-2%
- Mortgage insurance – around 0.5%
Here’s a great French property buying cost calculator created by the Notaires de Paris, that will give you a clearer indication of the Notaire, tax and incidental costs for purchasing a French property. The calculator itself is in French but is pretty easy to translate.
As you can see, whilst properties in France are still per square meter far cheaper than properties in most parts of the UK, the actual cost of purchasing is far higher. So you just need to be aware of this and budget accordingly.