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Costs related to a real estate purchase

Subscribing for a home loan within a bank generates different types of fees that are important to understand, especially so that you can compare 2 proposals with each other. Thus, I will list in this article all costs related to your real estate project and your mortgage .

SUMMARY

  • 1 Costs related to a real estate purchase
  • 2 The costs of your home loan
  • 3 Post-purchase costs

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Subscribing for a home loan within a bank generates different types of fees that are important to understand, especially so that you can compare 2 proposals with each other. Thus, I will list in this article all costs related to your real estate project and your mortgage .

SUMMARY

  • 1 Costs related to a real estate purchase
  • 2 The costs of your home loan
  • 3 Post-purchase costs

Costs related to a real estate purchase

Costs related to a real estate purchase

The base price of your purchase is the net seller amount . This amount corresponds to the amount that the seller will directly receive. This price is then the basis for calculating most of the ancillary costs related to your real estate project. At this price is added:

Notary fees : They correspond to approximately 8% of the net selling amount. These fees are broken down into the emolument of the notary (what the notary will collect), in taxes and duties (which is paid back to the state) and disbursements and ancillary costs (costs related to the intervention of the notary and other). All these fees are regulated. Thus, what matters the notary, you will pay the same amount.

The agency fees : They correspond to the remuneration of the real estate agent. The% is variable depending on the agents. It is usually around 5-6%. Unlike notary fees, agency fees are not regulated. You are free to negotiate!

Construction costs : Your real estate purchase may be related to the completion of works. So, it is important to include them in your budget, and above all, not to underestimate them. In case of big works, do not hesitate to call on a broker in works or a master of work. In addition, remember to check your eligibility for the zero rate loan if your work exceeds 25% of the total amount of your purchase (net seller + works).

The costs of your home loan

The costs of your home loan

The costs related to the mortgage correspond to all the expenses related to your loan and which are added to the simple monthly loan corresponding to the borrowed capital. In other words, you will not have to pay these fees if you buy your property with your own funds.

Guarantee Fee : The bank protects itself against your financial health through the guarantee. This can take the form of a real guarantee (mortgage, PPD) or a deposit (Housing Credit, CMH, CAMCA, CASDEN, SACCEF, etc.). Whatever the guarantee, the first principle is the same: If tomorrow you can no longer settle your due date, the bank must be able to recover its money, one way or another (it depends here on the type of guarantee)

Loan Insurance : The bank is also protecting against your physical health this time (and yes, it protects the bank …!) By asking you to take out loan insurance. Loan insurance is personal. It protects you and your heirs in the event of death, total and irreversible loss of autonomy, work stoppage of more than 90 days, or loss of employment if you choose this clause. You must choose a protection quota usually 50 and 100%. Thus, if the borrower A is 100% insured and dies, the insurance will cover 100% of the loan’s monthly payments, in other words, the property will be paid. You have the choice to subscribe to the loan insurance of your bank, or to resort to an external insurance.

Easily compare loan insurance with our free comparator simulator

Bank fees: These fees vary from one region to another, from one institution to another, and from one agency to another within the same bank … They are negotiable, but rarely offered. They are usually between 300 and 1500 €. They can depend in particular on the complexity of your real estate project.

Brokerage fees : They are only liable if you go through a broker . They vary depending on the broker but rarely exceed 1% of the amount of your loan. Just like bank record fees, these fees are negotiable. They correspond to the broker’s remuneration for his work. Note here that the broker is also paid by the bank, 1% of the amount of your bank loan usually. Also, some brokers simply offer a free brokerage service.

Early repayment benefits: These indemnities are due by the borrower in the event that he / she sells all or part of his / her loan (in the event of sale of the property, repurchase of a mortgage or a partial refund). They correspond to 6 months of interest, within the limit of 3% of the outstanding capital. These fees are negotiable. However, you will not be able to escape in case of redemption of competition, ie in case of redemption of your mortgage by a new bank.

Interim interest : They are set up by the banks as part of the construction or purchase with works. Indeed, in this case, you do not unlock all your home loan immediately since you pay the craftsmen or the builder as and when work. Thus, the banks do not charge you interest only on the amounts actually released. The amortization of your loan will begin once all the funds have been released. It must therefore be understood here that these intercalary interests correspond to pure banking fees.

Post-purchase costs

And yes ! Do not forget the “hidden fees” related to a purchase. Indeed, after your purchase, other fees will have to be taken into account. Every landowner in France must, in particular, pay:

Housing tax : It corresponds to a municipal tax. You pay the housing tax for your primary (and secondary) residence that you occupy on January 1 of each year. It is calculated on the basis of the net rental value , to which are deducted various abatements corresponding to your family and financial situation, to which then a% is applied according to the rate of your municipality.

Property tax : It corresponds to a municipal tax. You pay the property tax for any property you own on January 1 of each year. It is calculated on the basis of the cadastral income , to which then a% is applied according to the rate of your commune.

If you are in joint ownership, no doubt that it will also be necessary to envisage in your budget the expenses of co-ownership (which it is advised to inquire before the purchase!). These fees correspond to the common and management costs of the condominium on which you depend.

Finally, do not underestimate the maintenance work for your property. A purchase in the former will naturally generate more cost than a new purchase. The highest maintenance costs are usually the renovation of the facade, the roof, the woodwork, etc … The real estate diagnosis can in particular provide you with elements of response when the next work to consider.