Purchasing real estate in France (or anywhere else for that matter) is a huge undertaking and it’s important to be prepared for all the additional costs you’ll be required to pay. The purchase price of your new home is only part of the total amount you’ll need to budget for. Here are five other costs to expect.
When a property seller works with an agent to market and sell their home, they agree on the fee the agent will get. This fee is usually around 5-6% of the net property price. Low-value properties often come with higher fees, up to 10 percent. The agency fees are, more often than not included in the price but it is important to speak with your agent to confirm this.
Buying Taxes & Notaires fees
Expect the Notaires fees and buying taxes to be around 7% approximately. The buying taxes (similar to stamp duty in the UK) change slightly from area to area but are normally in the 5-6% range. Notaires fees are based on the value of your property and again, can change slightly with area but if you budget for 7% for these legal costs in total, you will not be far wrong. Speak with a notaire or your agent to find out the exact buying tax rate.
Foreign Exchange Costs
When you sign the initial sales agreement (Compromis de Vente), you’ll have to send 10% of the purchase price to a notaire. To keep foreign exchange costs down, you’ll want to use a foreign exchange specialist who may be able to save you part of the fee, as much as 5% of what your bank would charge you. The reason banks charge such a high foreign exchange rate is because they set a daily exchange rate and then also charge for the transaction itself. A specialist, on the other hand, watches the foreign exchange market much more closely, often by the minute, and will be able to secure the best deal possible while also waiving the transaction fee.
Mortgage Arrangement Costs
When mortgage rates are low, you may be tempted to get a French mortgage instead of paying for the entire cost of the property out-of-pocket. Please note that with a mortgage, you may also be required to pay an arrangement fee to your bank. It’s beneficial to use a broker to arrange a mortgage, because many brokers don’t charge extra fees.
If you’re going to take a French mortgage, it’s important to know that you’ll also be required to get life assurance. Many lenders make it mandatory to purchase one of their policies. Plus, some lenders will also require that disability coverage is included in the policy you choose.