Comprehensive definition of your project1363
Before starting the search for your property, you must first define your project based on different criteria. First of all, the first criterion to establish is your budget. What amount do you plan to invest and do you need a mortgage? Once this defined, you have to describe the features of your future property in France. Type, area, location, amenities. You need to put together the most accurate picture possible.
A project clearly defined right from the onset will be more achievable. This first step is essential to keep the project on target. It also helps to focus on the best search channels to explore. Starting point of a successful project, its definition then allows the study of its feasibility. As property finders we advise you on the feasibility of your project. This saves you from wasting time trying to undertake an utopian project. You may have in mind a project that cannot possibly be achieved. In this case, we discuss with you any factors you have to modify to make it as realistic as possible.
Your budget for the completion of your project
The first step to correctly define your project is to establish your budget. The budget determines the rest of your project. To evaluate the budget that you will devote to your property purchase in France, you must start by defining your level of personal deposit and your ability to borrow.
Your personal deposit
Having a deposit, even if limited, demonstrates your ability to save. The greater your deposit, the lower your debt ratio will be. This factor will be very important in case you plan to apply for a mortgage in France. Indeed, French banks greatly appreciate foreign buyers able to bring a deposit to finance their purchase. Generally, it is considered that the deposit must at least cover the Notaire and estate agency fees (around 15% of the cost of the property), but there are no set rules. Logically, the greater your personal contribution, the greater the chances of obtaining a mortgage in France as a foreigner.
Your borrowing capacity
Most real estate purchases made in France by foreigners or the French themselves require a mortgage. The calculation of the borrowing capacity is based on incomes and the level of debt. The level of debt corresponds to the ratio of total monthly borrowing to regular expenses and income. This ratio should not exceed one third of your income.
The search for mortgage takes place after the implementation of the preliminary sales contract. This search is usually linked to one of the suspensive clauses inserted in this document. It is nevertheless strongly advisable to obtain a pre-agreement from your preferred bank before starting your project. This will ensure that you do not start a project that unfortunately cannot be financed.
Once these two items added together, you get your budget for the purchase of your property in France. But this sum is not the net amount of capital available to buy your property. Secondary factors also come into play. You must take these into account when defining your project.
Additional costs to purchase a property in France
Trips to visit propertiesCosts vary depending on the number of times you must travel in France to visit properties. A collaboration with us allows you to dramatically reduce the number of trips.
The estate agency feesDepend on the agency you are dealing with. These fees represent between 5 and 10% of the price of the property. They are generally included in the selling price displayed but, depending on the situation of the agency and the seller (are they in a hurry to sell?), they can be negotiated.
The Notaire’s feesBetween 8 and 9% depending on the French Department you buy in. These are fixed, non-negotiable and governed by French Law. Refer to our article on the Notaire in France to get further information on these costs.
The cost of repaying the potential bank loanVariable depending on the bank, the value of the mortgage and the economic context.
Banking fees for opening and instructing the mortgageVariable depending on banks, easily negotiable, potentially totally free.
Insurance costsVary depending on your situation. “Death and Disability” insurance is not legally required. Nevertheless, few banks accept to lend if you are not covered for this risk. “Loss of employment” insurance is also not compulsory, but some banks may request it depending on your professional situation.
The costs of sending payment to France and the rate of exchangeVariable depending on the amounts and agreement between banks. As discussed in our chapter dedicated to the pitfalls to avoid, using the service of our partner Transferwise allows you to considerably reduce these costs.
Potential broker’s feesTo search and compare the different possible finance offers in France, you may wish to hire a broker. These brokerage fees represent, in most cases, 1% of the amount borrowed.
Moving costsIf you purchase a property in France that will become your main residence, then it is better to include the costs of your actual move in your budget. These costs will vary depending on the volume to move and your country of origin.
Even if you do not want to use a bank loan to finance your purchase in France, you must, of course, still consider these secondary factors to calculate the amount of investment you can make in France.
To summarise and conclude this part, here is a little secret formula!
Once we have properly defined the final budget, we can look at the features of the property you want to find.
The type and features of your property
Now, you have to define the features of the property you want to buy. First of all, you must determine the type of property that you want to buy. It is important to be clear and certain of the type of property you wish to buy right from the beginning of your project. This will allow you to correctly target the searches from the start. Nevertheless, if you are looking for a house in France, you can still also look for flats in the area targeted. We are in a position to find the following types of properties:
- Modern house/ Villa
- Character house
- Marina property
In terms of the features of your future property in France, we advise you to list them all. We recommend that you divide them into two categories. Essential features (no compromise) and features you may be a little bit more flexible on. The features that most of the buyers won’t compromise on usually are:
- The type of property
- The location
- The number of rooms
- The presence of a swimming-pool
Conversely, foreign buyers may be less demanding on criteria such as:
- The number of bathrooms
- The proximity to the airport
- The presence of a garage
So, when defining your project and its budget, do not forget to include all the secondary costs you have to pay. Do not forget that this budget affects the rest of your project. If set inaccurately, it will cause complications later. In terms of the features of your future property in France, feel free to use the tool that we developed. It will allow you to easily describe the type of property you want. Think about the features that you do not want to compromise on and those you may be a bit more flexible with.
This description and the budget you have now set allow us to start studying the feasibility of your project. We ensure that your project is realistic and that adequate properties are available on the French market. By doing so, neither party wastes unnecessary search time. It also increases the chances of completing your property search in good time. To have pre-agreement from your bank at this stage is not compulsory. Nevertheless, we strongly recommended that you obtain it. It will avoid having to go through unnecessary funding procedures later.