The TAEG (Taux Annuel Effectif Global) is the legal indicator that allows you to compare the total cost of different mortgage offers. It integrates the nominal interest rate, borrower insurance, processing fees, guarantee costs and all mandatory costs associated with the loan. In 2026, the gap between the nominal rate and the TAEG typically ranges from 0.5 to 1.5 percentage points.
Introduction
In 2026, mortgage rates in France are stabilizing around 3.2% to 3.8% on 20-year terms. But the rate displayed by your bank reflects only part of the real cost of your loan. Ancillary costs, such as insurance, processing and guarantee fees, significantly increase the bill. For a 600,000 euro loan intended for buying an apartment in Paris, the difference between two offers whose TAEGs vary by 0.3 points represents more than 20,000 euros over the full term.
Since 2011, our property hunters have been supporting their clients in analyzing financing offers. This guide gives you the keys to understanding and comparing the TAEG before committing.
Table of contents
- Definition and components of the TAEG
- What the TAEG includes and what it excludes
- TAEG and the usury rate: the legal ceiling
- Comparing two bank offers using the TAEG
- Levers to reduce your TAEG
- The property hunter and financing
Definition and components of the TAEG
The TAEG, formerly called TEG (Taux Effectif Global), is defined by articles L.314-1 to L.314-5 of the French Consumer Code. It expresses as an annual percentage the total cost of the loan relative to the amount borrowed.
Its composition rests on four main elements. The nominal interest rate (or debit rate) forms the base: it is the rate applied to the outstanding capital to calculate each monthly payment’s interest. Borrower insurance, mandatory to obtain a mortgage, often represents the second-largest cost item. Processing fees charged by the bank are added to the calculation. Finally, guarantee costs, either a mortgage or a surety bond, are included.
In 2026, for a typical 500,000 euro mortgage over 20 years, the nominal rate may be displayed at 3.4% while the TAEG reaches 4.2% once all costs are included. This 0.8-point difference represents approximately 45,000 euros in additional cost over the loan term.
What the TAEG includes and what it excludes
The TAEG must legally include loan interest calculated on the nominal rate, borrower insurance premiums if required by the bank, bank processing fees, guarantee costs (mortgage, surety bond, lender’s privilege), property valuation fees if required, and broker commissions if the intermediary is mandated by the bank.
However, the TAEG does not include notary fees, early repayment penalties, costs related to unmet conditions precedent and optional insurance (job loss coverage, for example).
This distinction is important: two offers displaying the same TAEG may have very different early repayment terms. A buyer who plans to resell within 7 to 10 years, the average holding period for a Parisian apartment, should check early repayment penalties independently of the TAEG.
TAEG and the usury rate: the legal ceiling
The usury rate is the maximum rate at which a credit institution can lend. It is set quarterly by the Banque de France and published in the Official Journal. Any loan whose TAEG exceeds the usury rate is prohibited.
In 2026, the usury rate for 20-year and longer fixed-rate mortgages stands at approximately 5.5% to 6%. This ceiling serves as a safety net for borrowers but can also become an obstacle: certain profiles, such as older borrowers with expensive insurance, may see their TAEG approach the usury threshold, making loan approval more complex.
The monthly adjustment of the usury rate, implemented between 2023 and 2024, loosened the system by allowing faster adjustment to market changes. In 2026, publication remains quarterly but the thresholds better reflect actual market conditions.
For a property purchase in Paris, where borrowed amounts are high, often between 400,000 and 800,000 euros, the risk of exceeding the usury rate primarily concerns borrowers over 50 and financing structures that include multiple complementary loans (bridging loan, zero-rate loan).
Comparing two bank offers using the TAEG
The TAEG is the legally prescribed comparison tool. But for it to be effective, the comparison must involve offers with identical parameters: same amount borrowed, same duration, same type of rate.
Let us take a concrete example for a 600,000 euro loan over 20 years intended for a purchase in the 15th arrondissement.
Offer A proposes a nominal rate of 3.35%, group insurance at 0.36%, processing fees of 1,200 euros and a Credit Logement surety bond, for a TAEG of 4.05%. Offer B proposes a nominal rate of 3.50%, delegated insurance at 0.12%, processing fees of 800 euros and a Credit Logement surety bond, for a TAEG of 3.92%.
Offer B, despite a nominal rate 0.15 points higher, has a TAEG 0.13 points lower thanks to significantly cheaper delegated insurance. Over 20 years, this TAEG difference represents a saving of approximately 9,000 euros.
This example illustrates why the nominal rate alone is an insufficient indicator for comparing mortgage offers.
Levers to reduce your TAEG
Three main levers can significantly reduce the TAEG of a mortgage.
Insurance delegation is the most powerful lever. The Lemoine law of 2022 allows you to change borrower insurance at any time, free of charge. In 2026, delegated insurance costs on average 0.10% to 0.20% of the borrowed capital, compared to 0.30% to 0.45% for bank group insurance. On a 600,000 euro loan, this difference represents 1,200 to 1,500 euros in annual savings, or 24,000 to 30,000 euros over 20 years.
Negotiating processing fees is the second lever. Bank processing fees vary from 500 to 1,500 euros in 2026. They are often negotiable, particularly for profiles with strong wealth potential, which is common among Parisian buyers.
The choice of guarantee, mortgage versus surety bond, also impacts the TAEG. A surety bond (Credit Logement, SACCEF) is generally less expensive than a mortgage and returns part of its contribution at the end of the loan.
The property hunter and financing
Financing is an integral part of the buying process we support at Home Select. Our property hunters work in coordination with partner brokers and banks to optimize financing conditions for our clients.
This integrated approach offers a concrete advantage: when we formulate a purchase offer, we know precisely the client’s borrowing capacity, the TAEG obtained and the conditions precedent that will be inserted into the preliminary agreement. The seller receives a credible, financially secured offer, which strengthens our negotiating position.
For expatriate buyers or foreign nationals, TAEG analysis becomes more complex. French banks apply specific conditions (higher deposit, premium rate) that directly impact the TAEG. Our knowledge of Parisian banking practices allows us to direct each client toward the institution best suited to their profile.
Consult our comprehensive analysis of mortgages in 2026 to explore financing strategies for Paris in greater depth.
FAQ
What is the difference between the nominal rate and the TAEG?
The nominal rate (or debit rate) is the interest rate applied to the borrowed capital. The TAEG (Taux Annuel Effectif Global) also includes borrower insurance, processing fees, guarantee costs and all mandatory costs associated with the loan. The gap between the two typically ranges from 0.5 to 1.5 percentage points.
Can the TAEG exceed the usury rate?
No, the TAEG can never exceed the usury rate set quarterly by the Banque de France. In 2026, the usury rate for 20-year fixed-rate mortgages stands at approximately 5.5% to 6%. Any offer whose TAEG exceeds this threshold is illegal.
How can I reduce my TAEG for a Paris purchase?
The three main levers to reduce your TAEG are delegated borrower insurance (saving 0.1 to 0.4 points), negotiating processing fees (saving 500 to 1,500 euros) and choosing a surety bond rather than a mortgage as guarantee. A broker or a property hunter with banking partnerships can facilitate these negotiations.
Looking to optimize the financing of your Paris purchase? Our property hunters guide you toward the best mortgage conditions. Contact Home Select for full support.
Frequently asked questions
What is the difference between the nominal rate and the TAEG?
The nominal rate (or debit rate) is the interest rate applied to the borrowed capital. The TAEG (Taux Annuel Effectif Global, equivalent to the annual percentage rate) also includes borrower insurance, processing fees, guarantee costs and all mandatory costs associated with the loan. The gap between the two typically ranges from 0.5 to 1.5 percentage points.
Can the TAEG exceed the usury rate?
No, the TAEG can never exceed the usury rate set quarterly by the Banque de France. In 2026, the usury rate for 20-year fixed-rate mortgages stands at approximately 5.5% to 6%. Any offer whose TAEG exceeds this threshold is illegal.
How can I reduce my TAEG for a Paris purchase?
The three main levers to reduce your TAEG are delegated borrower insurance (saving 0.1 to 0.4 points), negotiating processing fees (saving 500 to 1,500 euros) and choosing a surety bond rather than a mortgage as guarantee. A broker or a property hunter with banking partnerships can facilitate these negotiations.
