Guide to Finance when buying a property in France
French Property Mortgages
It is important to decide how you are going to finance your purchase as early as possible in your journey to becoming a home owner in France, especially if you want to take out a mortgage. There are several ways to organise a mortgage - either in at home or in France.
If you want to fund the cost in your home country and already have a mortgage or equity in a property, the usual method is to remortgage with your existing lender or consult a lender specialised in overseas properties.
French bank Mortgage
This can be a more complicated option requiring a thorough understanding of the types of French mortgage available and how to correctly complete the paperwork. You may benefit from using a mortgage broker who specialises in French Mortgage. They will know what offers are current, help with paperwork and make sure that you have a full understanding of the terms of the mortgage.
Your Leggett Immobilier agent will be happy to assist you to get an “in principle” mortgage; this can be really useful when you’re in a price negotiation situation.
For currency transfers it may be more economical to go through a specialist agency rather than via your bank. You may find you get a better rate, lower transaction fees and access to specialist knowledge of the markets, all of which can help you save money. Ask your agent for a recommendation.
Setting up a French Bank Account
You don’t need to own a French property to open a French bank account (currently, post Brexit this may change). Although it’s not essential to have a French bank account when buying a property in France (unless you have a French mortgage), it can be really helpful for paying bills, particularly when you want to pay by direct debit for services such as electric, gas etc.
Via a British bank
Several British high street banks have with offices in France eg HSBC, Barclays. You can usually open an account from the UK but it’s worth making sure that there is a local French branch that’s convenient for you.
Credit Agricole Britline
Credit Agricole is a French bank and offers a “Britline” account specifically aimed at English speaking clients. They provide English speaking support, online services and, via Credit Agricole, have branches right across France and in most towns. You can open a Britline account from the UK.
Opening an account with a French bank can be done online but you will have to provide physical documentation that may have to be officially authenticated.
Most banks in France provide services such as insurance for property, cars, and health top up which you are likely to require when you relocate to France.
Property Taxes in France
Whether you live in France on a permanent basis, or own a holiday home, you will need to pay property taxes. There are two main types of property tax in France.
An annual residency tax payable by the occupier of a property as at 1st January of the tax year. If the property is empty but habitable, the owner is liable for the tax. The bill is usually sent in the last quarter of the year and will indicate when payment must be made by, miss that date and you’ll be subject to a fine. Note that this tax is being phased out on a staggered basis, based on a number of factors including income for residents who are principal home owners - not for second home owners.
The Taxe d’habitation also includes the TV licence payment.
Some properties that are classified as holiday homes in areas where there is a housing shortage, may be issued an additional tax.
When you are buying a property the seller can provide you with a copy of the most recent tax demand, called avis d’imposition de taxe d’habitation.
Tax paid by the property owner. Check with your agent if a proportion of the tax can be assigned to the seller for the first year of your ownership if you’re buying post January 1st. Bills are issued towards the end of the year, again with a payment by date, fines are applied for late payment.
In some areas taxe d’enlèvement des ordures ménagères (TEOM), a tax for house refuse collection, may be applied.
The French Tax website www.impots.gouv.fr has more details (in French).