Would You Buy a Property in France Without Knowing The Exact Price You Are Paying?
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This is the question Moneycorp asked the attendants of the recent French Property Exhibition in London. The fluctuations in exchange rates can substantially impact the final cost of a property purchase abroad, and you could end up with a completely different price tag at the time of signing the Final Deeds.
Last year, for a property purchase in France for €250,000, exchanging in January compared to August would have translated to a difference of more than £11,000!
How can you minimise this risk?
Finding your dream property in France can be an incredible achievement. It can be the result of months of searching – even years – to find that property that ticks all the boxes, but also you can afford.
The offer is accepted, and the price is set; however, the work doesn’t end there, especially if you want to make sure that you are not paying more than what you have agreed and, more importantly, more than you can afford.
If you are holding a currency other than euros, the real cost of your property is determined by two factors:
- The timeline of a property purchase in France: on average, it takes 2-3 months to complete on a property in France from the time the offer is accepted. This period could be even longer if buying off the plan. During this time, you usually will have to face two significant payments: the deposit once the purchase contract has been signed – around 10% – and the final balance at the time of completion when the Deeds are signed before the Notaire.
- Exchange rates volatility: Rates are constantly fluctuating. It is unlikely that the exchange rate at the time you made your offer is the same as at the time you complete on the property purchase. This is the same as saying that the price you agreed on is likely to be different from the price you end up paying.
What can you do to keep the price agreed under control?
One of the most popular options among property buyers is to fix the rate as soon as the contract is agreed via a forward contract*. By fixing the exchange rate, you fix the property’s price, protecting it from any negative fluctuations between the offer and completion.
Forward contracts are usually available only via currency companies, and they can be used for buyers even two years ahead of the payment and without having full availability of funds. In fact, only 10% is needed to secure a forward contract, and that amount is not a cost but only a deposit.
Why Moneycorp?
With a Platinum Trusted Service Award 2020 from independent review site Feefo and 40 years of experience in the industry, FrenchEntrée has been recommending Moneycorp for more than 15 years. During this time they have helped thousands of client planning the best way to pay for their property as well as supporting them afterwards with any further payment from paying bills, mortgages to repatriating UK pension payments for those who have retired to France.
Furthermore, we have worked with the same person at Moneycorp for more than a decade! You might be familiar with her as she often writes for our French Property News magazine. She has 13 years’ experience in foreign exchange, and is a qualified European lawyer with experience in European transactions. Mar will be happy to answer any questions or enquiries to support you through these difficult times
Opening an account is really easy and free of cost. You can register online or over the phone in a couple of minutes and for FrenchEntrée readers there are no transfer fees in any payment.
*Forward contracts may require a deposit
Beware of currency risk. None of the information contained in this article constitutes, nor should be construed as financial advice. TTT Moneycorp Limited (company number 738837) is registered in England. Its registered office is at Floor 5, Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ. Moneycorp is a trading name of TTT Moneycorp Limited, which is authorised and regulated by the Financial Conduct Authority for the provision of payment services (firm reference number 308919). Date of Approval: 06/02/24
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