What is a Lifetime equity release mortgage?
A lifetime equity release mortgage is a mortgage secured on a property that you already own. The purpose of the loan is usually to improve your living standards in retirement, but in some circumstances they can be used to help family members, such as children. The capital repayments and the interest are usually deferred during the lifetime of the mortgage and are repaid on sale of the property, or on death of the home owners, whichever occurs first. In France, these loans are known as prêt viager hypothécaire.
What is the criteria for lifetime equity release in France?
For residents of France, there are not many options available for these kinds of loans, and their critieria is much stricter than the criteria in some other countries such as the United Kingdom. Currently, the eligibility criteria can be detailed as follows:
- Minimimum age: 60
- Available to employed, self-employed and retired individuals
- Tax resident of France
- European citizen, including British.
- Property must be located in an urban area with a population of at least 100,000 people, therefore unavailable for rural properties.
- Must be a residential property
- No health questionnaire required but a certicate from a doctor is required for borrowers older than 75 years old to confirm the borrower’s mental capacity to sign
- Can borrow up to 60% of the value of the property, depending upon the age of the borrower
- No maximum term, repaid on death or sale of the property
What are the drawbacks?
The interest rate on these loans is higher than for a traditional mortgage, therefore you could be worse off if you decide to sell the property before death, and the amount of assets that you will be able to pass on can be significantly reduced. Therefore, the product is unlikely to be suitable for those who may move house or for those for whom maximising the inheritance for their children or loved ones is a main concern.
What are the next steps?
If you are interested in applying for this product, please get in touch with Aisa International France by e-mailing support@aisainternational.fr.
The views expressed in this article are not to be construed as personal advice. Therefore, you should contact a qualified, and ideally, regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. Consequently, if you do not, then you are acting under your own authority and deemed “execution only”. Additionally, the author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Importantly, this article is dated and is based on legislation as of the date. It should be noted that legislation changes, but articles are rarely updated. Sometimes a new article is written; so, please check for later articles. Additionally, check for changes in legislation on official government websites. Finally, this article should not be relied on in isolation.
