How do I define my property budget ?

Defining your property budget is a very important step in the search for a property. To do this, it's important to take into account a number of factors, such as your income, monthly outgoings, savings and the costs involved in buying a property.

The first step is to determine your net monthly income, i.e. the amount you receive each month after deducting tax and charges. You need to list all your monthly expenses: current rent, bills, food, etc. It's important to make as accurate an estimate as possible to get a realistic idea of your monthly expenses. You can work out how much you can spend on your future home each month. It is advisable not to spend more than 30% of your monthly income to avoid finding yourself in a difficult financial situation.

The second step is to define the amount of your personal savings. You need to take this into account when working out your budget: it will enable you to incorporate it into your project as a personal contribution, allowing you to reduce the amount of your loan or pay certain costs yourself.

The third step is to consider the various costs involved in buying the property. In particular, you need to factor in notary fees and agency fees. We're talking about acquisition costs, which are made up of a number of taxes, plus the remuneration of the notary's office and the estate agent. Notary fees are calculated on the basis of the price of the property. The overall figure is 3% for new-build properties and 7 to 8% for existing properties. Your downpayment will therefore be used to finance the purchase costs, unless you obtain finance from your bank without a downpayment.

The fourth step is to find out about the various forms of assistance for which you are eligible. If this is your first purchase, you are what we call a "first-time buyer". This means that you are likely to be eligible for certain subsidised loans, such as the PTZ, for a purchase of an old property with work carried out, or a new property. There is also the Action Logement loan. There are also other loans offering advantageous conditions and rates to finance the purchase of your property.

The final stage is your meeting with your bank. When you take out a mortgage, you pay a monthly instalment that covers the capital and interest. You also pay other costs associated with the loan, such as guarantee fees, application fees and borrower's insurance.

The final stage is your meeting with your bank. When you take out a mortgage, you pay a monthly instalment that covers the capital and interest. You also pay other costs associated with the loan, such as guarantee fees, application fees and borrower's insurance.

To sum up, to determine your budget for buying a property, you need to :

• - calculate your debt ratio of 35%;
• - calculate your down payment 
• - find out about financial assistance;
• - find out the bank's terms and conditions (i.e. term and rate);
• - calculate the purchase costs (agency fees and solicitor's fees).

To make sure you don't get caught out, here are the costs you need to plan for once you become a homeowner :

• - moving and fitting-out costs
• - the cost of any refurbishment or renovation work ;
• - property tax ;
• - household waste collection tax (TEOM);
• - co-ownership charges if you are buying a property in a residence or block of flats.