Introduction
There are a number of ways to finance a property in Nice. Remember that there are two costs: the purchase price, and the notaire fees (purchase taxes), and you need to cover both. If you do not know about the notaire fees then please use the calculator on the Buying Costs page to find out what they will be.
A sale in France takes two to three months from start to close. You will need a 10% deposit within 10 days of signing the preliminary contract but after that you have plenty of time to liquidate assets or get a mortgage. The contract “final closing date” is usually set three months from the signing date and, even though you can close before then if everybody is ready, you have the right to use as much of that time as you wish to get the financing in place.
There are three general ways most people use and we will talk about these first. They are a cash purchase, refinancing outside of France, and obtaining a French mortgage.
Cash purchase
The simplest method is a cash purchase. Here you need to consider two factors:
- the exchange rate
- source of funds
The exchange rate can influence your buying power so I recommend using a good currency broker. They will get you a much better rate than your bank, you can lock in a rate or do DCA (dollar cost averaging) between offer and closing, and will deal directly with your notaire in France and sort out the source paperwork for you. Some clients have asked my opinion about using Wise, but from what I have read I would not personally recommend them for such a large amount. I have people I can recommend depending on which currency you wish to exchange.
Source of funds is important for two reasons. The first is that France has strict money-laundering laws. Every estate agent has to maintain a Tracfin file on all purchases to justify where their clients’ money comes from. The second is that ownership is directly proportional to the source of funds. By that I mean the percentage ownership you are buying must match the percentage sent to the notaire from an account in that name. If husband and wife are buying 50/50 then the bank account must have both your names on it. If parents are putting up 20% of the money of a purchase for a child to buy it solely in the child’s name then that money must first be put into the account of that child rather than being sent directly to the notaire by the parents. We can set up company structures, shell companies (SCI), but this is ownership and tax and belongs in a different section.
Financing outside of France
This is one of the most common methods, usually through equity release. Some countries such as the UK and USA have made it relatively simple to release some of the increase in value in your home in the form of a loan. This can be used to buy an asset abroad like a holiday home. If you are financing from abroad then there are two things to know.
First is that you still need to put down a 10% deposit (of the purchase price not including notaire fees) after signing the compromis de vente, though this can often be negotiated down to 5% if the seller is amenable. The notaire will often agree with both parties that it can be sent within 10 days of signing but this is not a rule and you cannot be sure the seller will accept. If you want to be safe then check that you can have the full 10% of your budget available at short notice.
Second is that in France every preliminary sales contract has at least two “get out” clauses. The first is your 10-day “cooling off period” during which you can cancel the sale at any time. The second is the “right to get a mortgage”. This only applies to a French mortgage. You cannot use this clause when raising finance from outside of France. Under French law, getting a mortgage abroad is treated the same as a cash purchase so you need to respect the deadlines listed in the contract.
Obtaining a French mortgage
Clients often use words like “slow” and “painful” but end up with a better rate than they could at home. At the time of writing, for a 20-year mortgage the average in France is 3.5%, in the UK it is 5.5%, and in the USA it is 7%.
There is no such thing as equity release in France and the amount you can borrow is purely based on your revenue. The rule is the same for French and for non-residents: your monthly repayment cannot exceed one third of your net income. Other mortgages will affect the net, and if you have rental properties then they will take this income into account using their internal calculations.
For non-resident buyers, each bank has its own rules. The amount can vary from 50% to 80% of the value of the property. In my last discussion with a broker, they were telling me most are unwilling to lend less than €250,000 with only a couple prepared to go as low as €150,000. I would recommend using a mortgage broker to negotiate a deal for you.
When using a broker, remember that the loan is still your responsibility. “The broker forgot to send the papers” is not a legal defence and it is your deposit at risk. Stay in regular contact and get frequent progress reports.
Now go to the Buying Costs page and use the mortgage calculator. You can use it two ways: you can change your monthly income and see how much you can borrow, or you can change the property price and see how much income you need to justify. You can play with the loan amount, interest rate, duration, and it will instantly give you a complete financial breakdown.
