pezzas Posted June 20, 2011 Share Posted June 20, 2011 Hi Everyone,I have not posted before and only recently started to consider buying a french property for sole use as a holiday home.We are currently drawing up a financial 'hit list' for a given property per annum in order to get some grounding on financial comitment necessary so...My first question is - what would I need to consider by way of insurances, taxes etc...? Any rough figures would be very helpful but I appreciate this will be property/ region specific so what to include in our calculations would be great...My second question is to ask your opinions on mortgage products available (mine field at the best of times admittedly) however we seem to be given choices of mortgages from 3 years through to 25 years based on an 80% loan... I personally don't want to be locked in to one product for the life of the mortgage but is staying with the same product for say 7/ 10 years the norm??? and is it relatively easy to change products at the end of the term?Thanks in advance for help as it will undoubtedly be of great help to us.Adam & Emma Link to comment Share on other sites More sharing options...
Pommier Posted June 20, 2011 Share Posted June 20, 2011 In my experience property taxes in rural areas tend to be less than UK rates, but if you're buying in a big town it could be the same or more.Again house insurance in rural areas is cheaper than the UK.I don't know anything about mortgages except to say that if your earnings are in sterling be aware of exchange rate fluctuations if you take on a euro mortgage. It might be safer to take the mortgage in the currency you earn.Beware of buying a place with lots of land as you'd need to factor in the cost of someone looking after it. Link to comment Share on other sites More sharing options...
EuroTrash Posted June 20, 2011 Share Posted June 20, 2011 Property taxes can vary from a few hundred euros pa to a few thousand euros pa, according to size of property and location.TV licence 123 euros pa is payable if your house has any facility to watch TV, even if you only watch English channels.Standing charge for water and electricity.If you don't have mains sewerage, costs associated with maintaining fosse.House insurance, probably contents insurance also.Bank charges for running French bank account.No iidea about mortgages but my impression is that French people don't tend to chop and change providers. Link to comment Share on other sites More sharing options...
Helen Posted June 20, 2011 Share Posted June 20, 2011 We took out our euro mortgage four years ago (so at the peak of the market and before any extra safeguards etc kicked in, so there may be differences now).We found that most French mortgages were offered on the basis of fixed interest rates, but with no flexibility to change the amount paid each month, pay off early or switch providers, without a large penalty. We managed to find a variable rate, more flexible mortgage. Whilst the interest rate varies our payments are fixed, so the rate of repayment is currently increased due to the drop in interest rates (although it could go the other way of course). All the French people we talked to about it seemed surprised that we were doing this but it suited us as it means we can move / pay it off quicker if we want to do so.With the wonderful benefit of hindsight, we are glad we didn't fix the interest rate at the time, but wish we had taken out a sterling mortgage in the UK for it (though at the time that seemed to be just adding complexity to the process). But we weren't to know what would happen - and as they always say, the past is not a guide to the future...We did end up using (and paying for) an overseas mortgage broker in the UK to help us negotiate our way through the system. That is out of character for us - we are normally quite happy dealing with bureaucracy and financial issues - but it proved to be a good decision. She helped sort out all sorts of minor (and less minor) issues along the way and was able to offer a lot of very helpful advice. Good luck whatever you decide to do - despite the change in the exchange rate etc we have never regretted for one second our decision to buy a holiday home in France. Link to comment Share on other sites More sharing options...
fisherman Posted June 20, 2011 Share Posted June 20, 2011 We increased out mortgage on our UK property and paid ‘cash’ for the property. Seemed to be the least complex and quickest method for us. Link to comment Share on other sites More sharing options...
debbie Posted June 21, 2011 Share Posted June 21, 2011 Pezzas: I will let others who are experts in the field of finance answer your questions about a mortgage but just a suggestion that you may want to consider a leaseback property for a holiday home as you do receive a guaranteed rental income and may not have to pay the VAT (19.5% of the cost). We have had one for 7 years now and have been quite pleased with it. We are allowed to still visit ourselves while having a management company oversee and rent it out for us through the holiday season. We now have it listed for sale but only because we plan to retire soon and are ready for a more permanent arrangement. Link to comment Share on other sites More sharing options...
Babbles Posted June 21, 2011 Share Posted June 21, 2011 With most french mortgages you agree to a monthly payment and the term extends or contracts subject to interest rate so it takes one of the variables out of the equation, good point on exchange rate if you are earning in sterling and paying in Euros equity release on your UK property could be a safer way forward. Our new french mortgage can be transfered to another property with out charge so saving on some of the Notaires and bank fees but more importantly when you end a french morgage you have to pay "tax"on it from my memory is correct it's about a 1000E and that has nothing to do with capital gains or being a non resident purely ending your mortgage. We're on our 3rd mortage and have used BNP Paribas and found the English speaking service to be very good. All that said french banks are very fussy about who they lend to now things have really changed over the last 5 years. Link to comment Share on other sites More sharing options...
Val_2 Posted June 21, 2011 Share Posted June 21, 2011 They want to see proof of income on paper and the general rule here is that you cannot borrow any more than one third of your monthly income, whether that has changed I don't know. Getting a loan is very easy, we have just got one for buying a new expensive work vehicle and got a decision on the spot although we had to provide written accounts verified and take out insurance. My son got a loan last week for upto €25,000 as a student without a regular income payable upto 20years as he wants to buy a new car. They said yes on the spot, he is borrowing only a fraction of that and over ten years which he can pay back sooner if he wishes with no penalties and they told him to go and choose the vehicle, get a bon de commande and they will do the paperwork this week with the money to follow. As long as you can pay the payments back each month, loans are there but you must state what they are for, you cannot borrow to pay off silly things. Link to comment Share on other sites More sharing options...
Rabbie Posted June 21, 2011 Share Posted June 21, 2011 [quote user="Val_2"]They want to see proof of income on paper and the general rule here is that you cannot borrow any more than one third of your monthly income, whether that has changed I don't know. [/quote]You must want a very small loan or have a very big monthly income[:D] Did you actually mean that your mortgage monthly payment shouldn't be more than a third of your monthly income? Link to comment Share on other sites More sharing options...
Val_2 Posted June 21, 2011 Share Posted June 21, 2011 Yes, that is how it was here until very recently.The deposit in France has always been hefty when buying a house from scratch, hence why renting is so popular until you can save up. The rule for loans and mortgages in particular was/is that your repayment should not exceed more than one third of your monthly income or else you cannot live and pay bills etc. For artisans such as us, getting loans is always backed up by an accounts bilan or for the employed, by bulletin de salaire slips etc. Link to comment Share on other sites More sharing options...
idun Posted June 21, 2011 Share Posted June 21, 2011 And I'll add to what Val2 has said, in it is Rent/Mortgage and all other loans should not go over a third of income, or sometimes 30% of income. My son couldn't get a couple of the appts he had looked at as his income was too low. Looking back it isn't a bad system. Doesn't keep everyone out of debt as there are ways and means of becoming endebted, even in France, but as a general rule, it isn't bad. Link to comment Share on other sites More sharing options...
Val_2 Posted June 22, 2011 Share Posted June 22, 2011 Yes there is debt here and we were surprised and quite shocked after buying and paying in three installments for a new american fridge from Darty via their finance,suddenly we were given a further €3500 credit to use. No way would I be tempted to even do that unless it was absolultely necessary and it was an item we could not do without,but it must tempt many and get them into serious financial messes. IKEA also offered us loans of upto €10,000 because we bought a new leather sofa over 6 installments and its not an expensive one either. Once you sign up for something however small and inexpensive, they pounce on you. Link to comment Share on other sites More sharing options...
pezzas Posted June 27, 2011 Author Share Posted June 27, 2011 Well thanks for all this information everyone - It has been extremely helpful!We're off to see a property on Saturday so I'll keep you posted on how it goes...In the meantime if there's anything else that may be worth mentioning then please do - The more info the better!Thanks againAdam & Emma Link to comment Share on other sites More sharing options...
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