Step by Step guide to buying a property in France

When buying in France, it is important to consider the impact that exchange rates might have in the different stages of the process and ultimately on your budget.

It is important to remember that between the day you have an offer accepted to the day you complete on the property, there could be a considerably amount of time. The reality is, exchange rates are constantly moving and can fluctuate hugely over a year, month, day or even a second. This could be the difference between affordability.

Fortunately, there are tools out there to help you navigate and protect your budget from negative rate moves, which are explained below.

The steps to remember

Here, we set out the best way to deal with the foreign exchange element in all the aspects of the transaction, before and after finding your property in France.

Step 1: Finding your property

When buying your dream home in France, the majority of buyers consider the most important factors to be the three p’s; property, picturesque location and price.

Yes…these are all very important however the price element isn’t as linear as it seems. Adding the element of foreign exchange into the mix creates an additional step and more complicated view on your budget. This is because you need to be constantly focusing on the price in Euros when you are holding a different currency.

This is why it is so important to be familiar with the exchange rate throughout the journey to ensure you are still within budget.

Step 2: Making an offer

You have found the property you were looking for. Is the price right for your budget? Be mindful of the exchange rate before you put an offer on the property. How much is the property costing me in my local currency?

Furthermore it is important to take that rate as a reference for the future stages as it will serve you as a guide and a benchmark for future transactions.

This is where having an account in place with Moneycorp really helps. You can email or call your personal market specialist directly – even if you are in France – and request an update on the rate which will help you with your offer to the seller.

Step 3: Paying for the property

Unless you are buying an off plan property you will be facing three payments towards the property:

– The deposit – usually 5- 10%- becomes payable once the compromise de vente –or purchase contract- has been signed and the 10 days cooling off period has expired.

– Completion funds – As an average completion tends to take place 2-3 months after the compromise de vente. The signature of the Title Deeds takes place in front a French Notaire in France. The final funds will have to be wired directly to the Notaire’s account.

– Taxes and Notaire’s fees – You will need to add this to the completion funds payable at the time of signing the Title Deeds.

Using a market specialist will help you to monitor the exchange rates through all the above payments by offering you personal guidance but also different tools to manage your risk.

The time between the purchase contract and the completion is always an open field. The couple of months that separate both moments can pose a risk and an opportunity for your budget and deciding the best thing to do is not easy. Ultimately the decision will depend on the market but also on your personal circumstances.

Using the tools available to you

If you are positive that the rate is likely to improve you can try to target an improved rate via a market order. A market order allows you target a desired rate and set up an automated payment conditional to that rate. Therefore if your target is achieved we will automatically buy your euros at the agreed rate.

However there is a risk that the market might take a different turn. If you are very sensitive to certain rate movements you can set a stop loss order. By agreeing a rate below which you cannot afford to exchange your funds, the order will be executed before the market drops to that level protecting the value of your transaction and your budget.

Another tool often used by property buyers are *forward contracts which allow you to fix the rate of exchange ahead of a future payment. There are mainly 2 reasons for a property buyer to fix the exchange rate ahead of completion. One, to take advantage of a rate move –even if you don’t have full availability of funds- and second to fix the price, protecting it from any negative rate fluctuations, giving you the peace of mind and the certainty on how much the property will cost you.

Step 4: After the property purchase

Once you own the property you may continue to be exposed to the fluctuations of the exchange rates. Maybe you decide to embark in a lengthy renovation project or you are thinking of renting the property out and bring the proceeds back to your home country. Perhaps you have decided to retire in France but your pension is still being paid at your local account or you have taken a Euro mortgage and face monthly payments.

In any case, there is likely to be some maintenance expenses –utility bills and local taxes- that you might need to cover.

In these cases Moneycorp can still help you cover these costs in the most cost effective way. You can use their online platform to manage small payments. Plus in some cases you can access a regular payment plan which will allow you to set up a direct debit and even fix the rate on small frequent payments for a period up to two years.