A 5-Step Guide to Buying a Property in France: Factoring in the Exchange Rate

For those at the early stages of their search, you may well be looking to take advantage of the upcoming sunnier months and take a trip to look at properties. Before you start your search, you should be aware that all aspects of buying a home abroad, from travelling to view your future home, to paying off your mortgage, requires foreign exchange at the heart of every payment.

Moneycorp’s expertise will provide you with full insight into the process and help to formulate a structured plan to your purchase and thereafter.

Step 1: Picking your property

When buying abroad, most buyers consider the most important factors to be the location, property type and the price. However, buyers often forget to factor in the added element of the exchange rate that we aren’t used to when buying domestically. Before stepping foot in France, you should be getting familiar with the exchange rates. This will help you to define your budget and your margin for minor fluctuations in rate.

Step 2: Planning your purchase

The ticklist:

– Compromis de vente/ Deposit

– Taxes

– Property completion

Agreeing a price

Once you have found the property, this is the first point at which you will need to know the exact property price. It is important that as soon as you know this agreed price, you know the equivalent it will cost you in your home currency. This is when you will need to make sure you are in regular contact with a market specialist to have the best understanding of the current market and all the options available to you when making your purchase.

Paying the deposit

Once you have chosen your property and accepted the purchase price, you will be required to pay your deposit to secure the property. Paying your deposit is your first stamp on getting your dream home in France. At this point you can use the options available to you to have certainty over your final price or you can use a combination of tools to diversify your risk.

Knowing your options

For those who are looking for certainty, the best option might be to lock the exchange rate ahead of your payment via a forward contract. This option has a clear advantage for those involved in a property transaction. By fixing the exchange rate you also fix the purchase price, giving you certainty over your outgoings. You don’t need to pay the full amount that you are fixing so it is an attractive tool for those whom might not yet have the full funds available. However you need to bear in mind that in order to fix the rate you will need to deposit 10% of the whole amount you are fixing. This is not a cost but just a deposit to ensure you will fulfil the contract when the payment date arrives.

For those a little less risk averse, a market order will allow you to set a targeted rate for your euros to be bought automatically when a specific set rate is hit.

Step 3: Making the payment

The day of completion

At this point, buyers who have taken advantage of the options a currency broker provides them will be well equipped for the final handover. With a forward contract in place, the transaction will be made at the agreed rate from the date of the deposit, on the day of completion. To those that have not utilised these tools may find that the exchange rate has moved negatively towards their payment, and suddenly the property is more expensive than previously expected.

Step 4: Maintenance

Once you have bought your forever home in the south coast, the need for currency exchange doesn’t stop there. Here’s some of the things you will need to consider;

– Running costs

– Renovations

– Mortgage payments

– Repatriation of rental fees if you were to let your home out as a holiday home

– Management fees for renting out when you are not there

– Paying bills

If you plan to let out your property, you will most likely need to pay management fees to the estate agents. Your dedicated market specialist will support you with this by setting a standing order to pay monthly at the rate you agree.

In these circumstances, using a regular payment plan will allow you to plan ahead by fixing an exchange rate for up to two years. This will allow you to fix your regular mortgage payments giving you certainty over your bills.

Step 5: Enjoy

Let us take care of the payments, whilst you take care of what matters.