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First french home?? how to buy??

Discussion in 'French Property' started by mikeyg47, Jan 13, 2008.

  1. mikeyg47

    mikeyg47 New Member

    Hi Guys,
    Am new on here so please forgive me if I ask or say something out of place but I have to learn somewhere ;)

    Can anyone offer me some advice about buying property in France? My in-laws live out there and have come across this run down house with a nice piece of land attached. It has been empty for two years and we have been offered it for 30 000 euros.. as I am in construction its an ideal opportunity for me to invest and maybe convert it into a small home for my family.

    My question is.. whats the best way of buying it..would I be able to take the equity from my apartment to buy it? would my lender let me? or do I get a mortgage in the wifes name and get her to buy it? Do I get a french or english mortgage?

    Anyway, if anyone can offer me some advice it would be great.

    Many thanks

  2. CaroleBay

    CaroleBay Senior Member

    Hello Mikey

    A warm welcome to you.

    In answer to your questions, there are three options .....

    1, Buy for cash - a simple and straightforward option.

    2, Re-mortgage your apartment to raise the capital, and then buy for cash - again a fairly straightforward option.

    3, Apply for a mortgage on the property from a French bank, but many of the French banks and mortgage providers have minimum lending limits, usually about 40k or 50k, although I do know of one mortgage provider that has a minimum loan of 30 000E.

    The high street banks, local to where the property is, would most probably be your best bet for mortgage finance (the French banks will only lend in the surrounding area that is local to them). With their knowledge of the local area and property prices they are more likely to offer mortgage finance on a property with a low purchase price.

    On a purchase price of 30 000E, you will need a deposit of at least 20% (maybe 30%).

    It is possible for mortgage finance to include the costs of improvements, but.... you will need to provide written estimates from tradesmen who are registered as such in the French system and have the necessary insurances to cover their work. The banks will not finance improvement works that you are doing yourself.

    For mortgage finance, the French banks work to a fairly strict rule about income vs expenditure, in that they allow a person to use only one third of their monthly income to service any existing loans or financial commitments, and has also to include the monthly cost of the French mortgage as well.

    Whether you choose to have the mortgage in just your name, or that of your wife, or jointly, is entirely your choice, but subject to complying with the third of income rule.

    I hope that helps you

    Carole Bayliss
  3. neustria

    neustria New Member

    Hello Mikey,

    I own several properties in France and through experience would advise against anyone making a purchase for a property which needs to be renovated. What I have found as a general rule is that renovation costs are never full reflected in the final value of your property. So, if you must buy, I would say, buy something you can move into right away. Importantly, don't be seduced by the presence of a nice pool when the house doesn't have cental heating. Electrical heating is cheap to put in but costly to use. As a buyer prefer gas or fuel if possible.

    Re. this point on buying unrenovated property, there is one notable exception, I think, and you might just fit into it... If you are a builder by trade then well, you know the renovation game pretty well, and your training could very well make such an investment cost effective.

    The language - all legal documents are necessaily written in French. An official document in another language has no legal value.

    As the buyer, YOU choose the "notaire" for the simple reason that you will be paying him. So choose an English speaking notary who is independant of the seller (ie impartial) and who can explain to you in detail what the conditions on the sale document are.

    Often buyers will request that part of the price be paid in cash. This is commonplace and many notaries turn the other cheek, but doing so will increase your capital gain when you sell.

    I hope that this helps.

  4. CaroleBay

    CaroleBay Senior Member

    Be careful ..... to pay cash (under the table) to reduce the documented purchase price, is also ILLEGAL.

    Carole Bayliss
  5. neustria

    neustria New Member

    Yes it is illegal. Did I forget to mention that? Oops!
    Thank you Carole.

  6. CaroleBay

    CaroleBay Senior Member

    Hi Neustria

    No prob's at all - it's good to get the message across about cash under the table, not just for the illegality, but as you so rightly said, it could increase the capital gains tax liability when the property is sold.

    Carole Bayliss
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