18 April 2018 - French Mortgage News | International Mortgage News | Partners News |
Secure your dream French home at the best price with a French Mortgage
Spring is all about new beginnings and the first hint that summer is on it’s way. Which is why it’s IPF’s busiest time of the year for new enquiries. Potential French property owners have been away on holiday or viewing trips and are keen to secure that dream French home in time for the summer. The good news is that the typical time line for a French property purchase is 3 – 4 months and even with the glut of French bank holidays in May, that still gives the banks and the notaires ample time to seal the deal.
It does mean that you will need to act now and get an offer accepted within the next few weeks. Here are some of our top tips to make sure you negotiate the best price at a price the vendor will accept:
1) Make sure you know what the true cost of the property is before making an offer
Just like the in the UK, the level of additional but obligatory fees involved in a French property purchase can add a significant amount to the final bill. In France the estate agent’s fees are paid for by the buyer – check that the asking price has got FAI next to it. If it doesn’t, you’ll need to add between 4 – 11% onto your offer. Likewise, notaires fees are around 7.5% on top of this (and can’t be added to a mortgage if you were looking to fund the purchase with a loan). Check whether the furniture/garage/outbuilding/neighbouring field is included; don’t get caught out and think you are getting a bargain, only to be hit with these bills at the end.
2) Know what your maximum price is
Use our mortgage and French purchase calculators on our site for a rough idea, but then contact IPF and after a 15 minute phone call we will be able to tell you exactly what you can afford. You may well be surprised! With French mortgage rates as low as 2.15% for a 20 year fixed rate or 2.00% for a 14 year interest only your budget may be bigger than you think. That obviously isn’t a reason to overpay on a property, but it might mean that you have a larger selection of properties to choose from, and a greater chance of finding one at the best price.
3) Mitigate the exchange rate fluctuations with a mortgage
We’ve said it before, but it’s still worth re-iterating: French mortgage rates are still at historic lows and most products have only small or no early repayment fees. This means you can keep your cash savings in sterling, pay a low monthly euro payment and then re-pay the mortgage in full a few years down the line if the exchange rate recovers. This has the potential to save you tens of thousands of pounds which is the cost of a swimming pool or the new kitchen (See our article in the Sunday Times for more details). Likewise, make sure you talk to a foreign exchange provider like World First (Contact our dedicated account manager direct here for a quote) – they can give you their expert opinion on the exchange rate and ensure you get a much better rate than your local bank. You can also organise forward contracts that will give you more clarity on what the final price will be once you have transferred your deposit. All of this knowledge allows you to make a much more confident offer.
4) Obtain an Approval in Principle and be treated as a cash buyer
In popular areas like the Alps, Dordogne and the Cote D’Azur it’s not unusual for there to be multiple offers on the same property. If you can show that you have got a mortgage approved in principle for the required loan amount the vendor will know that you are a serious buyer making a viable offer. Depending on the financial situation of any other buyers, and the vendor’s situation, it may also allow you to make an offer for a lower amount. It also means that timeframe to complete the purchase can be reduced as the majority of the work to obtain the mortgage has already been done. As most AIPs do not have an expiration date, you can obtain one at any point, even if you haven’t yet found a property. Read here for more details on the benefits of getting an AIP.
5) Beware the hard sell, and don’t let the language barrier stop you from asking all the right questions
Just like in the UK, agents immobiliers will use their powers of persuasion to close the deal. Remember, it’s in their interest to get the highest price they can as they will earn a percentage of it. So make sure you ask all the questions you need – find out what the vendors position is; is this property their main home or a holiday home, why are they moving, do they need more space, or are they moving for a job elsewhere? How long has it been on the market, have any offers been accepted before and why did they fall through? How quickly do they want to move, are you happy to go with their timeframe? The answers to these questions will all have a bearing on how attractive your offer will be to the vendor. And it’s not just the estate agents, but also the developers. If you are buying off-plan, do not sign anything until you’ve taken independent advice about the development and if you are requiring a mortgage which lenders are prepared to secure a loan on it. (Check out our video on buying off-plan on our video channel here)
6) Don’t dismiss the importance of the French culture and the importance placed on the asking price
You do need to bear in mind that French vendors may not think and negotiate in the same way as in the UK, more often than not property is passed down through a family and this may be the first time your vendor has sold a property. This can mean that the negotiation can be a little more straightforward with not so much to-ing and fro-ing but you need to be careful not to offend with your first offer. Obviously every negotiation is different and much will depend on the area and type of property and vendor that you are dealing with.
More importantly, in France if the asking price is offered, the vendor must take it. As French properties are often listed with multiple agents, many potential buyers lose out by putting in a lower-than-asking-price offer that is beaten by another buyer represented by another agent. So, if you know you want the property and the asking price is fair, you need to consider whether the risk of losing it is worth any potential saving you were hoping to get on the asking price.
7) Don’t let emotion get the better of you!
Easier said than done, especially when you can only make one or two viewing trips a year and you’ve got summer looming. Don’t let the vendor take advantage of this. It’s a cliché but a house is only worth what the next person will buy it for. Make sure you check out the prices of similar properties in the local area, make sure you go and see a few so that you can really understand how fair the asking price is. Don’t make the mistake of comparing the price of a large rural country manor in the Dordogne with one in the South-east of England, as it will obviously seem like a bargain. Just because you can afford the asking price don’t think you have to pay it. Check out the most recent French house price report so you can get a feel of the market conditions.
We hope these tips come in useful. If you would like to discuss any offer you have made or would just like to understand what French mortgage rates would be available to you, please contact us on 0207 484 4600 or fill in our online quote request form.
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