If you’re going to need a mortgage to buy a property in France it’s a good idea to sort something that out in advance. There are several ways to organise a mortgage – either at home or in France.
Re-mortgaging to buy a French home
If you already have a mortgage or equity in a property in your home country, the usual method is to remortgage with your existing lender. Or you can consult a lender specialised in overseas properties.
French bank Mortgage
Without a thorough understanding of the types of French mortgage available and how to correctly complete the paperwork, this can be challenging. You may benefit from paying a mortgage broker who specialises in French Mortgages. They will know what offers are current and help with paperwork. They can also provide an English translation and make sure that you have a full understanding of the terms of the mortgage.
For currency transfers it may be more economical to go through a specialist agency such as Universal Partners FX, rather than via your bank. You may find you get a better rate, lower transaction fees and access to specialist knowledge of the markets. It pays to do your homework on this one.
Setting up a French Bank Account
You don’t need to own a French property to open a French bank account. It’s not legally required to have a French bank account when buying a property in France (unless you have a French mortgage). But, without it life will be very difficult, especially when it comes to paying for services such as electric, gas, phone etc. There are new online banks setting up which many say makes finance and transfers much easier.
Opening an account with a French bank can be done online. But, you will have to provide physical documentation. And it may need to be officially authenticated.
Most banks in France provide services such as insurance for property, cars, and health top up.
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.
Tax paid by the property owner. Bills are issued towards the end of the year, with a payment-by date, fines are applied for late payment. If it’s your first year of ownership, a proportion of the tax might be able to be assigned to the seller, if you’re buying post January 1st. Check with your agent or notaire.
In most areas a taxe d’enlèvement des ordures ménagères (TEOM), a tax for house refuse collection, will additionally be applied.
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. Make sure you pay by the date indicated. If you miss it, 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. This tax is gradually being phased out.
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.
The French Tax website www.impots.gouv.fr has more details (in French).