Whether you fancy the authentic charm of mellowed stone, sun baked tiles and beams or classical French architecture or a more recent dwelling...
Two types of marital status are recognised in France:
• Joint estates or "Communauté de Biens"
• Separate estates or "Séparation de Biens"
Unless specific steps are taken before purchasing, British married couples buying property in France will be deemed to be in the “séparation de biens” status. There are possible advantages to adopting the “communauté de biens” status for inheritance reasons. For further information, please seek advice from your notary or a specialised lawyer
More trading Real Estate Company / Société Civile Immobilière ou SCI
An SCI - Société Civile Immobilière – or More trading Real Estate Company - can be described as a property-holding company. It enables two or more people to purchase a property together. Creating an SCI provides the buyers with two main advantages as opposed to buying a property as separate individuals.
• It facilitates the transfer of a share of the property to someone else should one of the buyers wish to sell their interest. In doing so, the remaining parties who also purchased the property are not obliged to sell their shares if they do not want to.
• It can provide greater flexibility in the context of French inheritance laws.
Our mortgages calculators allow you to:
- Calculate your monthly repayments, based upon the term (in years) of your mortgage, its amount (in euros) and your mortgage annual interest rate.
- Calculate how much you can borrow (maximal amount of your mortgage), according to the term and annual rate of your mortgage, and the monthly installment you wish to pay.
Notary / Notaire
In France, the business of buying and selling of property (“conveyance”) is handled by a notary. A notary is a public official who is responsible for ensuring that all deeds are authentic and cannot be contested. They are responsible for drawing up such deeds, and in some cases also draft the preliminary sales agreement.
Notaries are required to be objective in the advice they give and to act impartially towards the parties they serve. Consequently, the same notary generally acts for both seller and buyer. However, each party may employ a different notary if they wish. If two notaries are used, the fees – which may not exceed a limit set by French law – will be shared equally between them. These fees are always paid by the buyer. BNP Paribas International Buyers has established contacts with multilingual notaries in France. Details can be obtained from your personal mortgage adviser. We can also put you in touch with solicitors or lawyers who specialise in French law.
As a legal charge is taken on the property when taking a BNP Paribas mortgage, a Notary needs to intervene.
If you bought your French property with personal funds within the last six months (12 months for a purchase off plan or a construction), BNP Paribas International Buyers can offer you a post-finance mortgage for this acquisition by releasing the required funds to you via your French notary. The same conditions apply as for acquisition finance, i.e. maximum 85% of price for repayment mortgages and 75% for Interest Only. Our only requirement is that we receive your mortgage application within 6 months from the date that you signed the “acte authentique de vente” at the notary’s office.
Preliminary sales agreement / Compromis de vente ou promesse de vente
Before proceeding to the final deed of sale which is drawn up by the notary and will transfer the ownership of the property, you will need to sign a preliminary sales agreement, known in French as a “compromis de vente”. This can be drafted and witnessed by the estate agent or the notary. It is an important step and you should seek advice from your notary on the wording and conditions.
Remortgaging / Refinancement
Remortgaging is the action of financing an existing mortgage with another mortgage. By doing so, the borrower can save money thanks to a more interesting (lower) interest rate. If you think you are in this situation, BNP Paribas International Buyers can help you with your re-mortgaging project:
- You want to re-finance a mortgage on your current French property,
- You want to re-finance a mortgage that you contracted in another country,
Remortgaging is a practical solution for those who are in search of a more competitive or better-suited mortgage deal. If you already own a home in France, BNP Paribas International Buyers can refinance existing French or UK * mortgages. The total refinance package should not exceed 75% of the current value of the French property for a repayment mortgage, or 70% for Interest Only.
* Possibility of other countries subject to approval.
Repayment period / Durée de remboursement
This is the period during which a borrower has to make payments of capital and interest on his or her mortgage. It depends on: the total amount of the French mortgage and on its interest rate.
You can use our French mortgage calculator to know what your repayment amount and period will be.
If your home in France is your principal or holiday residence, you will also be required to pay an occupancy tax, or a "taxe d'habitation ". Occupancy tax is based on the rental value of the property defined by the land registry and local authorities
All home and land owners in France must pay a local property tax known as a "taxe foncière". This tax is based on the rateable value according to the location, the type of building, the surface area and the comfort criteria.
Transaction charges / Frais de négociation
These are the fees charged by the estate agent or the notary for negotiating the purchase of the property and usually represent between 5% and 10% of the purchase price. Sometimes, these fees are included in the purchase price and are paid by the buyer. If the sale is negotiated directly between the buyer and the seller (“vente de particulier à particulier”), these fees will not be payable.
Valuation appraisal / Expertise
This is an estimate of the value of the property. The purpose of the valuation appraisal is for loan assessment only and the results are not released to applicants.
A valuation appraisal is carried out in most instances. However, it is important to note that this may vary slightly from the mortgage survey traditionally performed in your country. The appraisal is undertaken by an assessor rather than a qualified surveyor. Any structural defects may therefore not be identified. The purpose of the valuation appraisal is for loan assessment only and the results are not released to applicants. If applicable, it will be arranged by BNP Paribas International Buyers at no expense to the borrower.
Variable Rate Mortgages
BNP Paribas International Buyers variable rate mortgages usually offer stable monthly payments. It is the duration of the loan which varies when the rates rise or fall over a given period. If the interest rate of your loan rises, the duration of the loan is increased within a limit of 5 additional years after the initial term of the loan defined therein. The instalment amount will remain constant as long as interest rate rises allow the full repayment of the loan before the end of the five additional years. Variable rate mortgages are very flexible, and offer, subject to certain conditions, other advantages as well: no redemption fees should you wish to make an early, partial or complete repayment of your mortgage, and the possibility to convert to a fixed rate mortgage at any time.
Acquisition of a property to be built (off plan) / Vente en l’état futur d’achèvement (VEFA)
For the purchase of properties under construction (Off Plan / V.E.F.A - Vente en l'Etat Futur d'Achèvement), both parties must sign a reservation contract (contrat de réservation). This contract includes items such as the guaranteed price of the home when built, payment stages which coincide with the different phases of the property's completion and technical specifications. The buyer usually pays a 5% deposit when signing the reservation contract, which is then deducted from the total purchase price.
Bridging loan / Prêt relais
A bridging loan, also called a swing loan, is a special type of loan on a short-term period, allowing you to buy a second asset without having to sell your current property immediately. Its maximum period is two years. Its minimum amount is €75.000. With BNP Paribas International Buyers, you can borrow up to 70% of the value of the property being sold. This kind of mortgage is only available if associated with a long term mortgage.
Buildings and Contents insurance / Multirisques Habitation (MRH)
Buildings and Contents insurance is insurance which provides cover for the rebuild or repair costs to a property and the costs of the contents within that property in the event of damage. This insurance is obligatory and the policy must be put in place before you sign the deed of sale. Your notary will ask for a copy of the policy at the moment of signing the deed.
BNP Paribas International Buyers can put you in touch with English speaking representatives of insurance companies in France.
Buy to let / Investissement locatif
A Buy to let mortgage finances the purchase of an investment property to be let out for residential purposes. Whether it is an existing or new property, a flat or a house, you will have the choice of renting it furnished or unfurnished depending on whether you want to let for short (holiday accommodation) or for longer periods, with a tenant and monthly rent. BNP Paribas International Buyers will be happy to go through the financial options with you and guide you in your choice of mortgage.
CCMI (Contrat de Construction de Maison Individuelle)
If you wish to design your own home in France with or without the help of an architect in the location of your choice, one of your options is to do it via a CCMI.
Literally “CCMI” is a contract for the construction of an individual dwelling. Having found a plot of land it is advisable to seek advice from local authorities in order to obtain planning permission. You will subsequently sign a preliminary sales agreement for the purchase of the land and a separate contract the CCMI with your builder.
Change of ownership fees / Frais de mutation
A fee is charged to the buyer when property in France is transferred from one owner to another. This fee, legally fixed by the authorities, is based on the agreed purchase price of the property and on whether or not it is old or new. The notary is responsible for collecting this fee and transferring it to the local or regional administrative bodies.
Charges for mortgage security / Frais de garantie
Whenever you take out a bank loan in France to finance your French property, the loan is secured with a charge on the property.
• First charge on property
If you buy an old or a new existing property involving a transfer of ownership, the security associated with this loan is called a first charge on property ("PPD – Privilège de Prêteur de Deniers").
• Contractual mortgage
However, if there is no transfer of ownership - as in the case of refinancing an existing loan - or you are purchasing a property under construction, the security is contractual mortgage ("Hypothèque Conventionnelle").
Condition Precedent (Get out Clause) / Condition suspensive
When using a mortgage to finance the purchase, the sales agreement should contain a get out clause (“condition suspensive”), so that if the mortgage application is not successful, the deposit will be refunded.
Deed of sale / Acte authentique de vente
The deed of sale or “Acte authentique de vente” is drawn up by the notary in charge of the sale who also guarantees it is legally secure and efficient. Before the notary presents the deed of sale for signature, he ensures that all legal work and formalities have been completed and that the buyer has been granted a loan, life insurance and has subscribed buildings and contents insurance. Once the date for the definitive deed has been fixed, the notary will collect all funds to cover the transaction price. He will make a written request to BNP Paribas International Buyers for the mortgage funds. We, in turn, will transfer the money to the notary for the agreed amount.
French law states that the notary must retain the original deed of sale, while the buyer will be given an official copy. Once you, as buyer, sign this document, the property will be yours.
Deposit / Accompte
On signing, the buyer deposits a sum - generally up to 10% of the purchase price - with the notary or the estate agent. The deposit is usually described as a payment on account subsequently deducted from the purchase price, or may be used as a penalty fee if the preliminary sale agreement is broken.
Down payment / Apport
The down payment or personal contribution is the part of the purchase price which the buyer pays in cash and which is not included in the BNP Paribas mortgage. Usually, the down payment is to be paid at the time of the completion of the purchase. When financing the purchase of a property with a BNP Paribas mortgage the personal contribution is the difference between the purchase price and the mortgage amount requested.
Fixed Rate Mortgages / Prêts à taux fixe
Fixed rate mortgages mean that your monthly repayment amount and the loan duration are fixed from the beginning. You will know from the start how much you will pay and how many payments are to be made. However, these loans are less flexible than variable rate mortgages as they may not be converted to variable interest rates at a later date, and early, partial or complete repayments are subject to redemption fees.
When you purchase a property in France, French inheritance laws apply to that property. These laws, which are very different from the Separate Estates laws in most Anglo-Saxon countries, can have an impact on the use of the property in the event of a spouse-owner's death. Unless specified beforehand, a surviving spouse/partner residing in France will not automatically become the legal beneficiary of the property prior to any children's rights. To counter these effects, specialised lawyers could advise to set up an SCI or change one's marital status and have it validated in France only for French assets. It is also possible to draw up a personal will. This is an important and complex issue. For more detailed information on the implications of marital status and inheritance laws, please seek advice from your notary or a specialised lawyer.
Interest only mortgage
Interest Only mortgages may be attractive for those whose net worth is substantial and for clients who are certain of their ability to pay back the capital when required. For the duration of the loan, you will only be required to pay back the interest and the insurance premiums when applicable. The capital will be paid back in one lump sum at the end of the loan. With BNP Paribas International Buyers, you can always convert the interest rate of your mortgage into a fixed rate for the remaining term or convert your Interest Only mortgage into a repayment mortgage with a fixed rate for the remaining term.
France receives more visitors than any other country in the world and the French themselves often rent properties for their holidays.
In order for them to have somewhere to stay and to boost the French tourist industry, the government gives incentives to those who are prepared to invest in quality rental properties (called “Résidences de Tourisme”). They are available in many parts of France, including Paris, Normandy, Brittany, the Alps and the Côte d’Azur.
If you are seeking to invest in quality rental property found in resorts called “Résidences de Tourisme”, the benefits are more than enticing. Not only will your property be managed for you, ensuring contractually guaranteed income; you will also benefit from a full VAT refund on the investment. And what’s more, you can enjoy your property for several weeks each year!
If this type of investment is for you, BNP Paribas International Buyers will find the financial solution best adapted to your project. We have an approval process for development programmes which is an assurance of quality and means more security for you.
Legal fees or Notary’s fees and costs / Frais de notaire
Notary fees in France, or “frais de notaire” (because they are paid through the notary) are usually near 10% of the value of the French property for an existing property and more like 5% on new property. As an example, you must pay as notary fees:
- Conveyance fees (“Frais de mutation” )
- Charges for mortgage security (“Frais de garantie”)
- Notary fees (“frais de notaire”) – they include the cost of certain acts, such as the registration of the mortgage and the official documents needed, like the deed of purchase.
The fees and costs charged by the notary, which are fixed by French law, consist of two parts: firstly, the costs relating to the sale/purchase, or conveyance (“acte de vente”), which arise whether or not a mortgage is taken; and secondly, the specific cost of registering the mortgage on the property (“frais d’acte / frais d’hypothèque”)…
Concerning the notary’s fees, the conveyance costs will range from 6% to 8% of the purchase price and the cost of registering the mortgage on the property will range from 1% to 3% of the mortgage amount. In addition, you may have to pay VAT for properties under five years old where there has been no previous sale, but in this case the conveyance fees would be lower. You should check with the Notary the exact settlement amount and the method of payment.
Taking out a life insurance policy enables to cover the amount of a property loan. It is not a legal obligation in France. However, potential buyers should be aware that French banks do not offer loans without it. In most cases, the mortgage protection and loan application are treated simultaneously. The mortgage protection is available in two options:
• Cover of the remaining capital due in case of death or disability
• Cover of the monthly payments in case of long-term incapacity due to accident or serious illness.
BNP Paribas International Buyers requires its clients to be protected for the amount of the loan through a life insurance policy, and has put together a special package with a French insurer to provide comprehensive cover.