Financial planning for a French mortgage, tax, and currency exchange
When buying property in France, it’s really important to look carefully at your finances. This will help you plan for every eventuality during the purchase process. There is much more to consider than you may initially think – especially with French mortgages.
Thinking about your finances is one of the most important things to do when considering French mortgages. Assessing your current financial situation will determine how much money you can comfortably use for the property purchase. It’ll show whether this comes from savings, a mortgage, or re-mortgaging your property in the UK.
Buyers are often caught out by the additional costs that are involved when buying in France. The different fees and also the legal process are not the same as in the UK. Our detailed guide to buying property in France, The France Buying Guide, refers to these as ‘hidden costs’. These unexpected bills can run into thousands. Make especially sure you do not lose money unnecessarily in this way.
Hidden property buying costs
The cost of these extras will vary, depending on a number of factors. The age of the property, whether you need a loan to buy it, and any other niggling costs that could pop up unexpectedly are all important.
We generally advise all property buyers in France to allow around 7-10% of the property’s costs for all fees and charges, or 2-3% if the property is new.
This would include your deposit, the fees involved in setting up a mortgage (including life assurance) and also transfer tax or stamp duty. Furthermore, it would also include notary fees, independent legal fees, property registration fees and possibly the cost of a survey. This is all in addition to the estate agent fees, which are paid by the buyer in France. We generally advise all property buyers in France to allow around 7-10% of the property’s costs for all fees and charges. Likewise, we recommend around 2-3% if the property is new.
The France Buying Guide looks into the detail of these hidden costs and will guide you through the different buying process costs. Download your copy today.
Financing your property
Finding your dream property in France is very exciting, but working out how you are going to pay for it is less so… You may have enough cash to buy the property outright. However, it is often likely that you will firstly need to look at one of the many loan options available to you – such as a mortgage.
Since the global recession, lending conditions have become more stringent. However, interest rates are lower than they were in France, and fairly similar to their UK counterpart. However, interest rates are set by the lenders in France. These are usually influenced by the Euribor (European Interbank Offer Rate). Lending criteria tends to be based upon a percentage of your income, typically 33%. However, there are exceptions to this and different interpretations of the rules. Some lenders believe it should be on gross income and others contrarily on net income. As there are many different types of French mortgages available, each with varying levels of criteria, it is important that you assess all your options carefully. We recommend seeking advice from a professional advisor on what best suits your needs.
They say that there are only two certainties in life: death and taxes. When you are planning to emigrate from the UK to France (or indeed any country), tax planning will need to be at the forefront of your mind, as there are implications depending upon your residential status. You need to ensure that you have the right measures in place so you do not end up paying your taxes twice (in both France and the UK). As well as this, you should plan for all HMRC implications on emigration, capital gains tax and inheritance tax issues, and ensuring that all relevant local taxes in France are considered and provided for.
Register today to speak with a trusted IFA about your financial requirements.
Overseas money transfers
Sending money to another country is a critical part of the overseas property buying process, yet its importance is often underestimated. Each overseas transaction you have to make, whether for French mortgages, legal or estate agent fees, will expose you to exchange rate fluctuations. These currency movements have the potential to unnecessarily eat away at your budget and take the price of your property out of reach.
France Property Guide recommends using trusted currency specialists, Smart Currency Exchange when transferring your funds to France for your property purchase
France Property Guide recommends using trusted currency specialists, Smart Currency Exchange when transferring your funds to France. They pride themselves on being able to help their clients mitigate the risk associated with any currency exchange transaction. For example, if you’ve had an offer accepted but the protracted nature of property purchases means you don’t know when you’ll complete, they can help you use a forward contract. It secures your exchange rate now, protecting you from any adverse fluctuations before you complete.
Get a quote today to find out how much Smart could save you.
Save money when buying overseas
Get the best foreign exchange rates with Smart Currency Exchange. Whether you are buying a property abroad, making regular payments, sending money overseas or back in to the UK, you want the most cost-effective, safe and easy way to transfer your money. That's where Smart Currency Exchange can help. As the one of the UK's fastest-growing currency exchange specialists, we save our clients thousands of pounds every day by minimising the risk associated with transferring money overseas.