Why fixed-rate mortgages are common in France

French lenders primarily offer amortizing fixed-rate loans. Payments stay stable over the term, making budgeting predictable. Most products allow partial or full early repayment, subject to contract terms and statutory caps.

What really drives the total cost (TAEG)

In France, comparisons hinge on the TAEG (annual percentage rate of charge). It must include every mandatory cost required to obtain the loan: - Interest at the contract rate - Borrower insurance (assurance emprunteur) when required by the lender - Application and processing fees (frais de dossier) - Guarantee costs (caution from a guarantor or a registered mortgage/hypothèque) - Broker fees where applicable and mandatory

Because TAEG reflects the full borrowing cost, it is also the rate tested against the usury cap (taux d’usure) published by the Banque de France.

Borrower insurance matters

• Coverage: typically death and total permanent disability, with optional incapacity or unemployment depending on profile.
• Delegation: you can often choose equivalent cover from another insurer (délégation d’assurance) if it matches the lender’s required guarantees.
• Switching: recent reforms allow switching at any time, with standardized information to compare premiums and guarantees.
• Medical formalities: simplified paths may apply for smaller loans and younger borrowers subject to contract and legal thresholds.

Insurance can represent a large share of monthly cost; include it when comparing offers.

Guarantees: caution vs. mortgage

• Caution (guarantor company, e.g., mutual guarantee funds): generally lower upfront taxes, administrative fees, and a potential partial refund at term depending on provider rules.
• Hypothèque or IPPD (legal charge on the property): involves registration taxes and notary fees; releasing the charge (mainlevée) at resale/refinance adds cost.

Ask for both scenarios to see which is more economical over your expected holding period.

Affordability rules lenders follow

French underwriting is shaped by national guidance: - Debt-to-income ratio (taux d’effort): commonly assessed around 35% including borrower insurance. - Maximum term: often capped at 25 years for standard purchases, with limited exceptions (e.g., certain new-build or off-plan structures with a short deferral phase). - Savings buffer and residual income: lenders review remaining income after housing costs and recurring obligations.

These guardrails can affect how much you can borrow even if the rate looks attractive.

Fees you may encounter

• Application/arrangement fee (frais de dossier)
• Appraisal/expertise fee
• Guarantee setup cost (caution or mortgage registration)
• Notary fees on the property purchase (separate from the loan but crucial to your cash plan)
• Broker fee (if you use a courtier and the fee is contractually due only after loan acceptance)

Always verify whether each fee is included in the TAEG; mandatory items should be.

Early repayment: partial or full

French law caps indemnities for early repayment (indemnités de remboursement anticipé, IRA). Unless your contract waives them, the charge for repaying early cannot exceed the lower of: - 3% of the outstanding principal, or - Six months’ interest on the amount repaid at the contractual rate

Key points: - Partial prepayment: lenders usually set a minimum amount or percentage. You can typically choose to reduce the remaining term (often the most interest-efficient) or lower the monthly payment. - Full repayment (sale or refinance): expect IRA unless your contract provides an explicit waiver. Some lenders waive fees in specific life events or when refinancing internally—check the offer. - Administrative items: if your loan is secured by a registered mortgage, factor in release costs (mainlevée) upon full repayment.

Refinancing vs. porting

• Refinancing: replacing your loan to secure a lower rate or change duration. Compare the gain against total costs (IRA, new guarantees, new fees).
• Portability (transférabilité): some contracts allow transferring the existing rate to a new purchase under conditions. Availability varies by lender; confirm upfront if this option matters for future plans.

The loan offer and timeline

• Binding offer (offre de prêt): the lender sends a formal offer outlining all terms and the TAEG.
• Cooling-off period: you may only accept after a reflection period; the offer also has a validity window. Respecting these dates is essential to avoid delays in completion.

Practical ways to lower lifetime cost

• Seek insurance delegation with equivalent cover to reduce monthly premiums.
• Request both caution and mortgage guarantee quotes to compare total costs including release or potential refunds.
• If making extra repayments, prioritize term reduction when possible.
• Track all costs in a TAEG-based comparison rather than just the nominal rate.
• Anticipate holding period: if you expect to sell or refinance early, model IRA and release fees in your plan.

Summary

Fixed-rate mortgages in France provide payment stability, but the true cost depends on insurance, guarantees, fees, and regulatory constraints. Understand TAEG composition, verify early repayment terms and caps, and compare scenarios on an all-in basis to make a well-informed decision.