Mortgage Products & Fees

Repayment Mortgage – With a repayment mortgage you pay off each month a proportion of interest and capital against the loan. At the end of the mortgage term your mortgage is paid off. the advantage of this is the knowledge that your mortgage will be repaid at the mortgage end of term. The main drawback is that this type of mortgage is more expensive and in the early years as most of the repayment is interest there is little reduction in the mortgage owed.

Interest Only Mortgage* – With an interest only mortgage you only pay off interest every month and so monthly repayments are lower. With this type of deal you have the flexibility of how you repay the mortgage off at the term end. If you wait until the term end to repay the mortgage the overall cost of borrowing will be higher compared to a repayment mortgage where capital is being repaid gradually over the term and therefore the interest in relation to the debt reduces.

*Some lenders may not offer an interest only mortgage option depending on your circumstances and the mortgage you require . Both repayment types above apply to residential, commercial, buy-let, equity release loans and mortgages for yachts and private jets.

Mortgage Fees- FRANCE

The main factors

The fees associated with buying a property in France can be alarming. This page provides a checklist of what you as a buyer can expect to pay. The main factors that affect the level of fees are:

• the age of the property (new houses attract lower charges)
• the number of people involved (lawyers, mortgage companies, surveyors etc)
• whether you buy through an estate agent

What allowance should I leave for fees?

Total fees can be as low as 2% of the price of the property, but can be as high as 20%. Typically, you can expect to pay around 6-9% of the net value of the property on an older property and around 2-3% on a new build (less than five years old). Please note that most fees are paid by the buyer. However, since the introduction of a series of diagnostic tests on any property to be advertised for sale, the seller too has a liability to bear this cost (see below).

Estate Agent Sales Commission (usually paid by the buyer of the property)

Where an agent is involved – allow between 5 and 10%. 10% is quite commonly charged.

Notaire Sales Commission (usually paid by the buyer)

Where an Estate agent is not used – allow up to 5%

Notaires’ Conveyancing Fees (paid by the buyer)

A Notaire’s fees are calculated on a sliding scale. Thus, the higher the price of the property, the lower the percentage the Notaire will take. The amount is usually in the region of 1% (plus TVA at 19.6%). The other fees that are paid to the Notaire but do not, in fact, ultimately go to the Notaire, are fees for stamp duty, land registry fees and other disbursements. All the Notaire’s fees are usually paid by the buyer, even if the Notaire acts for both parties, which is normal as they are not supposed to protect the interests of either party over the other. If the seller instructs a different Notaire to the buyer, the fee for both Notaires is paid by the buyer. (In this case the work and fee is split between the two Notaires, it does not mean a higher cost for Notaires’ fees.)

Stamp Duty (paid by the buyer)

0.6% for property less than five years old, 5.9% for older properties. This is included in the fees paid to the Notaire.

Land registry (paid by the buyer)

Land registry fees are approximately 4.89%. These are included in the fees paid to the Notaire.

Safer (paid by the buyer)

Safer is the agricultural organisation who may become involved if the property has a certain amount of land over one hectare. Any associated cost is usually included in the fees paid to the Notaire and is usually only a few hundred Euros.

New Diagnostic Tests or Diagnostics Immobiliers (paid by the seller)

Unusually for France, the burden of payment for these does not fall on the buyer, but on the seller. Before a property is advertised, approved experts must be called to report on the energy efficiency, presence of dangerous and outdated materials such as asbestos, tests on the provision for gas, electricity and sewage, and tests to establish if there is evidence of termite activity or other natural risks. Costs vary from area to area and from expert to expert, but expect to pay between 400-900 Euros for a Dossier Diagnostique Technique, or DDT. (Diagnostic Immobilier and selling property in France.)

Legal Advice: If there are complicated clauses in the sale, or other complex issues, additional legal advice may be required, again at additional expense. This cost may be paid by both buyer and seller, or one or the other. Legal fees vary hugely, depending on the solicitor and also on how much work is involved.

Additionally if you need a French mortgage:

Mortgage Arrangement and Administration Fee – Commonly 2%

Mortgage Registration Fee – Commonly 1-2%

Mortgage Insurance – Commonly around 0.5%

Mortgage Fees- UK

Buying a property can be an expensive exercise and it is important that you are aware of all the costs that come into play when buying your home. The costs relating to your mortgage will be set out clearly by the lender in what is known as the “Keyfacts” document provided to you. These costs may include:

Arrangement Fee – Charged by the lender to cover the administration costs of processing your mortgage. This will vary from deal to deal. You normally have the option of adding this fee to your mortgage but this will increase your cost of borrowing over the mortgage term.

Mortgage Broker Fee – If you have used a mortgage broker to help arrange your mortgage for you then a fee may be charged which will be outlined in your keyfacts document.

Mortgage Account Fee – Applied by the lender at outset when you first take out your mortgage to cover the set up and termination costs of your mortgage.

Valuation Fee – Charged by the lender to value your property in assessing the value for mortgage purposes.

Re-inspection fees – If a lender has required you to make agreed repairs to the property a re-inspection may be required

Higher lending charge – If you are borrowing a high loan to value the lender may decide they wish to insure the possibility that you may need to sell your home and this results in a loss.

Early redemption charges – If you pay off part or all of your mortgage earlier than expected the lender may charge you a fee – this will be covered in your keyfacts document.

Mortgage exit fee – Paid to your lender when you repay your mortgage.

Insurance costs – as part of your mortgage you may be encouraged to take out insurance either by a broker or the lender to cover buildings insurance and other optional insurance such as mortgage life insurance.

International Mortgages

Not only do we source mortgages for French & UK property, we can also assist in other popular European destinations such as, Spain, Portugal, Italy and Germany.

We have specialists that can also assist with mortgage approvals in the UAE and the USA.

Contact us today for further information on these types of mortgages.

Property Investment

We are not Estate agents but we have successfully managed to obtain mortgages across several Leaseback Investment Developments in the South Of France.

Not only do these properties benefit from being VAT FREE, an initial saving of 20%, they also come with guaranteed rental returns of between 2.5%-4% and allow owners up to 6 weeks holiday per year.

Please see our current developments here to read the Full brochure of these exciting opportunities and then contact us for further details and to arrange a visit.