Do you want to make a success of your property purchase? There's no secret: you need to prepare it step by step, especially if it's your first property purchase. Good preparation and good advice will be your best allies at this important stage in your life. That's why we're presenting you today with the 8 key stages in a successful property purchase!
Before talking about budgets and price negotiations, insurance and clauses, compromises and the right of withdrawal, the first step in buying a property is to define its scope and objectives.
What project are you passionate about at the moment that keeps you awake at night? Is it buying your main residence, a rental investment or a second home?
There are many different types of property project, each with its own specific characteristics. All of them involve important stages that should not be improvised. Here's what you need to know before embarking on a property project.
The second major stage in buying a property is defining your precise budget. This is undoubtedly the most important stage in the process of buying a house or flat. It is from this calculation that everything will flow.
This estimate is based on your total income and savings. Buying a property often requires a large sum of money. You will often have no choice but to take out a mortgage, even if some buyers are able to pay cash. So you need to work out your borrowing capacitywhich depends largely on your income.
To be known, and above all controlled, the purchase budget needs to be calculated in advance. This is the key stage in buying a house or flat.
How do you estimate your purchase budget?
There are several ways to calculate it:
This information gives you an initial estimate of your property purchasing power, based on your salary and current banking conditions. You can calculate your borrowing capacity online, from your computer or telephone, by running a more detailed simulation using our simulator.
Determining your borrowing capacity, i.e. the maximum amount you can borrow based on your income and deposit, enables you to target properties that match your budget. This saves you valuable time on future visits.
Preparing for your purchase also means putting in place a genuine savings strategy beforehand. In the vast majority of cases, a deposit is one of the essential conditions for obtaining a loan. Banks generally ask for between 10 and 20% in downpayments. With a large deposit, you're more likely to get a better mortgage rate or to have more room to manoeuvre for your project.
Armed with this budget estimate, you can now start looking for a property that matches your budget. And this can be a long process. Be patient and responsive in your search: the rare pearl is just around the corner!
Tips for your property viewings :
Property search can sometimes be complicated. In some towns, there are few properties for sale and many buyers ready to make an offer. And all too often, you feel that you're always too late when you call about an advert and the estate agent says, "sorry, an offer has just been accepted!" It's a slightly frustrating time, but with a bit of courage and good timing, you'll eventually find it.
Here are our tips for optimising your property search:
Information to check before buying
Because of the time and money involved in buying a property, it can sometimes be difficult to make the right decision. A few good practices can put your mind at rest. This means providing a good level of information and transparency. Here are some points to check.
The price
Find out about the prices of the properties you are interested in. Prices vary according to the characteristics of the property and its location. You can check average prices online. Better still, you can analyse all sales over the last 5 years on the basis of the property value request published by the government.
The neighbourhood
Because it's not just the price you need to check, don't forget to find out about the local area and how dynamic it is. What transport links are there nearby? Where are the shops and facilities you need on a daily basis? What are the town planning projects for the next few years? How busy is the area during the day and at night? Take a look around and decide for yourself.
Condition of the property
The price depends on the neighbourhood, the surface area and the condition of the property. A property in perfect condition generally sells for more than one with a lot of renovation work. If you're not afraid of renovation work, you should still take the time to check all the property's fixtures and fittings and how they are maintained.
Documents to read
When you sell a property, there are a lot of documents to be provided and read. The dossier de diagnostics immobiliers will become your bedside reading for a while. Take the time to read all the documents relating to the state of the property and the state of the co-ownership if you are buying a flat or a house in co-ownership. All this information is extremely important for the future, and can reveal a number of anomalies: a property that uses a lot of energy, an installation that no longer complies with standards, the presence of termites, etc.
In short, read and reread these documents and ask your estate agent and solicitor questions to remove any doubts.
You've been on one viewing after another, and finally it's love at first sight: the last thing you want is for the house of your dreams to slip through your fingers. The offer to purchase stage means that you've found a property that matches your criteria. There are no formalities, but it's best to follow a few good practices.
How do you formalise your offer to buy a property?
Formalising your offer to purchase in writing is certainly the most recommended method. You can make your offer in writing or by e-mail.
When can you negotiate the sale price?
At this stage of the sale, you can negotiate the price, but negotiation is not automatic. If you see that the property has been on the market for several months, you may have some room for negotiation with the seller. Make your offer based on concrete factors, such as the average price in the town or the amount of work required. Negotiation is always possible, and once you've got the seller's agreement, you can move on to the next stage.
After negotiating the price and making an offer to buy, you're ready to go. You've reached an agreement with the seller. Now it's time to sign the compromis or promesse de vente.
The preliminary sales agreement :
The compromis de vente is a bilateral agreement, known in French as a "promesse synallagmatique de vente". The seller undertakes to sell you his house or flat and you undertake to buy it from him. It works like a reservation. You can go through with it, but you can also back out. If the property no longer suits you, you have 10 days in which to withdraw without giving any reason. Once this period has elapsed, it will be difficult to cancel the purchase unless one of the conditions precedent in the pre-contract is fulfilled, for example if you do not obtain your financing.
The promise to sell :
Unlike the compromis de vente, the promesse de vente is binding only on the seller. It is a unilateral undertaking to sell. In return, the buyer must pay approximately 10% of the sale price to tie up the property. If he buys the property, this sum is deducted from the price still to be paid (like the deposit) and if he renounces, the seller keeps it as compensation.
What are the conditions precedent attached to the sale agreement?
Suspensive conditions can be financial in nature. For example, if you do not obtain your finance on time, the sale may be cancelled.
They can also be non-financial. For example, if you decide to have a house built and you are unable to obtain planning permission, you can withdraw from the purchase. You can also make the sale of your current home a condition precedent, but sellers do not always agree.
What is your withdrawal period?
The 10-day cooling-off period begins on the day following notification of the compromis and its annexes. If you wish to withdraw during this period, you must send a registered letter to the vendor, the agency or the notary.
And what about escrow?
Once you have signed the contract, after your withdrawal period, you pay the notaire between 5 and 10 % of the sale price. This is known as the escrow. What happens to this money?
Here are the different scenarios:
In the event of cancellation without fulfilment of one of the conditions precedent, the seller may retain this sum by way of compensation.
If the sale proceeds as normal, the notary will hold this sum in an escrow account, which will be released on the day the deed is signed.
Have you found the house or flat of your dreams and signed the preliminary sales agreement? Now it's time to find a mortgage to finance your purchase!
You have between 45 and 60 days to find the finance you need to buy your property. Be patient, take your diary and get ready to present your project to the banks in order to obtain a mortgage offer.
The watchword at this stage is anticipation. Don't wait until you've found your property and signed the preliminary sales agreement to start your banking procedures. Get ahead of the game, because time flies.
What documents do you need to provide for a loan?
When you apply for a mortgage, you'll be asked to provide a number of documents. You'll need to show proof of identity and income, including your most recent payslips, bank statements, tax returns and so on. Make sure you have everything quickly. The sooner you provide all the documents, the sooner your application will be studied and put together... and the sooner you'll get your mortgage offer!
When we say anticipate, we also mean anticipate the management of your bank account. The bank will be very attentive when studying your bank statements for the last 3 months, those from your main bank as well as those from your secondary bank if you have one! So be organised and rigorous, and make sure your application is as clean as possible to maximise your chances of getting a loan quickly.
Do you have to repay your consumer loans?
Anticipation also means paying off your debts: a car loan, for example, which can limit your borrowing capacity.
As mentioned above, the time you have to look for finance is limited and you need to act quickly. To do this, you can be assisted in your search by a property broker or apply directly to your banker... or both, to get the best terms on the market!
The broker's job is to make your life easier, save you time when you're looking for a loan and find you the best deal for your profile!
Your broker will be with you every step of the way to ensure that your property purchase goes as smoothly as possible. Your dedicated expert will negotiate the best loan offer with his banking partners.
Before the end of the 45 or 60 days stipulated in the suspensive conditions, you receive one or more loan offers. You're nearing the end of your journey and the loan offer is your ticket out. It's at this point that buyers are a little less stressed about the steps involved in their purchase.
Agreement in principle :
The agreement in principle is an important stage in your property purchase, but it is not the final offer. This is one of the steps involved in obtaining a mortgage. The agreement in principle covers all the features of the loan, such as the amount, interest rate and terms and conditions. You must have the approval of third-party organisations such as the insurance company or guarantor in order to validate your situation.
The loan offer and its clauses :
Sent by post and recorded delivery, the loan offer is the document that the bank sends you when it officially offers you a loan. This contractual document sets out the general terms and conditions of the loan and contains numerous clauses that you should read carefully. It stipulates the transferability of the loan, the modularity of repayments, borrower's insurance and early repayment penalties.
To choose between two banks, you can base your decision on the interest rate, but also on the annual percentage rate of charge (APR), which includes all the costs associated with the mortgage, including borrower's insurance.
The 10-day cooling-off period under the Scrivener Act :
When you receive your loan offer, you have a statutory cooling-off period. You are making a commitment for many years, so it's best to take the time to read all the fine print in the loan offers you receive.
When you receive the loan offer, you must wait 10 days before signing it. This is the legal 10-day period laid down in the Scrivener law. Once this period has elapsed, you can return your loan offer.
There are 4 parties involved in signing the deed of sale: you, the vendor, the estate agent and the notaire.
When you sign, you pay for the property, the notary's fees and the guarantee. Together with the vendor, the notaire informs you of all the laws, legal consequences and penalties if the commitments are not honoured.
The notarial deed generally has to be signed within a short time of the loan offer being signed. The funds are released a few days before the notarial deed is signed. The funds will be transferred to the notary's account.
Handover of the keys marks the end of your home ownership journey. You are finally a homeowner.
