French Equity Release Schemes
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Equity release in France – the facts
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Connexion edition: October 2009
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These are life-long mortgage loans which are secured on a property. The main elements of the loan are the following: It is available for those over the age of 65, which means in the case of couples they both must be over 65. The maximum amount of the loan is fixed by law, and, where couples are concerned, based on the younger age. These are as follows: to age 70 – 18% of the property value The interest rate is currently 8,80% annually. The interest is compounded, that is to say that the interest is calculated on the outstanding balance of both the original loan and the accumulated interest, and then added to this combined outstanding balance. The loan can be repaid whenever one wants, irrespective of the reason for making the repayment. Subject to the new property values, the loan can be transferred to a new property. As one becomes older, it is possible to obtain more of a loan in accordance with the age and maximum loan table above. There is a 4% application fee, normally taken from the loan amount itself, thus reducing what you would in fact finally receive. In addition, there will be notarial fees based on the value of the property, but its probably best to presume these will be in the region of at least 1%. Further factors With regards to the amount eventually obtained through the prêt viager hypothécaire, and despite the maximum lending percentages above, there are other factors which may in fact decrease the amount finally obtained. |
France’s equivalent of equity release is known as prêt viager hypothécaire.
