The TAEG, or taux annuel effectif global, is the all-in annual cost of a French loan. It adds the borrower insurance the bank requires, the guarantee, the arrangement fee and any broker fee to the interest, so it is always higher than the nominal rate. It appears on the European standardised information sheet and in the loan offer, and it must stay under the legal cap. Compare offers on the TAEG for the same amount and term, not on the headline rate.
What the TAEG measures
The TAEG (taux annuel effectif global, the annual percentage rate of charge) expresses the total cost of a loan as one annual rate. It is the rate that equates what you actually receive, after the upfront costs, with everything you repay over the term, insurance included.
Lenders must show it in their advertising, on the European standardised information sheet (FISE) you receive before the offer, and in the loan offer itself. It is also the figure tested against the legal cap, the taux d'usure.
What the TAEG includes and leaves out
Included, whenever you have to pay them to get the loan:
- interest at the nominal rate
- the arrangement fee (frais de dossier)
- fees paid to a broker or other intermediary
- the borrower insurance the bank requires
- the guarantee, whether a mortgage charge or a guarantee company's fee
- valuation costs, and the cost of any account or payment card you must hold
Left out: the costs of buying the property itself, so the notaire's purchase fees and the transfer taxes; optional cover such as job-loss insurance when the bank does not require it; and, on an off-plan purchase, the interest you pay on stage payments before the loan starts to amortise.
TAEG versus the nominal rate
The nominal rate (taux nominal) is the interest rate on the capital and nothing else. It is the figure in broker barometers and on the rates page, and it sets the interest line in your amortisation schedule.
The TAEG is always higher. Even with no fees at all, it sits slightly above the nominal rate, because it is expressed as an annual compound rate while interest is charged monthly. Fees paid at the start add more, and insurance adds most for older borrowers. Two offers at the same nominal rate can have quite different TAEGs.
Worked example: one loan, four rates
Assumptions: €250,000 over 20 years at a nominal 3.55%, borrower insurance at 0.30% a year of the amount borrowed (€62.50 a month), a €1,000 arrangement fee and a guarantee of €3,750. The repayment is €1,456.33 a month before insurance and €1,518.83 with it.
| What is counted | Annual rate |
|---|---|
| Nominal rate | 3.55% |
| Interest only, as an annual compound rate | 3.61% |
| Plus arrangement fee and guarantee | 3.83% |
| Plus insurance: the TAEG | 4.34% |
Over 20 years this loan costs €99,519 in interest, €15,000 in insurance and €4,750 in fees, €119,269 in all. Now take a second bank quoting 3.45% with a €2,500 arrangement fee and its own insurance at 0.40%. Its TAEG is about 4.47% and its total cost about €122,686. The lower headline rate is the more expensive loan.
How to use the TAEG
- Compare like with like. The TAEG only compares offers for the same amount and term. A longer loan can show a lower TAEG and still cost more in total.
- Check the insurance behind it. If you plan to take external insurance, ask for the TAEG with that policy, since it changes the figure.
- Check it against the cap. If the TAEG is close to this quarter's cap, the bank may have to change the terms before it can lend.
- Ask for the total in euros as well. A total cost over the term is often easier to compare than a percentage.
Next step
Run your own figures in the calculator, which estimates the TAEG from the rate, insurance and fees you enter. Then use the eligibility check, and the broker we introduce you to will set out the TAEG of each offer side by side.
Questions
What is the TAEG on a French mortgage?
It is the all-in annual cost of the loan: interest plus the insurance the bank requires, the guarantee, the arrangement fee and any broker fee, expressed as one rate.
Is the TAEG the same as the APR?
Broadly, yes. TAEG is the French name for the annual percentage rate of charge (APRC), the all-in rate lenders must show on mortgage offers across the EU.
Does the TAEG include notary fees?
No. The notaire's purchase fees and transfer taxes are costs of buying the property, not of the loan. The cost of the bank's guarantee is included.
Why is my TAEG higher than the interest rate?
Because it adds insurance, the guarantee and fees to the interest, and expresses the total as an annual compound rate.