What is the “Viager hypothécaire” and how does it work in France?
The “Viager hypothécaire” is a personal loan secured by a mortgage registered on real estate belonging to the borrower, granted without death insurance.
What is it for?
In comparison to classic mortgages, the purpose of this loan is to finance the personal needs of the borrower: health costs, home help, retirement home, work to improve or maintain a building, vehicle, travel, leisure, education for children. It is not allowed to apply for a mortgage linked to business activities (SARL de famille & SCI are both excluded).
This loan allows you to borrow a sum of money while legally remaining the owner of the property placed as collateral. Plus, there’s no obligation to repay the loan while you’re alive!
Where to apply? How to determine the loan amount?
Credit institutions, financial institutions and now third-party financing companies can offer the “prêt viager hypothécaire”. There are three main points at what lenders will look at in order to determine your maximum loan amount.
1 – Your property and its value
2 – Your gender (In France, women have a better life expectancy than men, it will allow them to have a more interesting offer)
3 – Your age (the younger you are, the better the amount of the loan will be)
What are the consequences of a “Viager hypothécaire”?
A “viager” loan will never permit you to obtain a 100% LTV on your property. To offset the risk, most lenders will allow you from 25% to 75% LTV maximum.
Also, as a “viager” can’t be linked to a property, if you are using your residence partially as an office, you won’t be eligible for this particular loan.
To finish, the lender has the right to forbid you from renting your property. Make sure to discuss it before signing anything.
How can we, at French Private Finance, help you?
French Private Finance can help you release some equity from your property using its network of private banks. However, the property must be around 2M€ minimum and you would be paying the interest or the interest + capital every month just like any other loan.
FPF is also connected with a mortgage broker specialized in out of the box deals in France. The value of the property must be around 1M€ minimum.The bank would offer a short term deal where you will not pay any monthly payments. At the end of the term (often 5 years), the capital and the interest are repaid in one go, generally with the sale of the property. As you can notice, contrary to the viager hypothecaire, it is not conditioned by your passing. This is the big difference. The bank may also place some assets under management (part of the funds released) as a guarantee.