Options now available for home equity release in France

An increasing number of options are available to homeowners looking to release equity from their French homes.

Some years ago, the only main option for a loan repayable from a person’s estate after death was the prêt viager hypothécaire (PVH) by Crédit Foncier de France, a now-defunct bank in the Banque Populaire Caisse d’Epargne (BPCE) group.

More recently, the PVH (branded as ‘Foncier Reversimmo’) has been offered again by branches of Caisse d’Epargne and Banque Populaire in certain regions; however, several readers report difficulties in obtaining information via contact forms on the banks’ sites, or local branches of these banks.

It comes, however, as other options are increasingly available.

Equity release options

One is to take a PVH from a specialist bank called Crédit Foncier et Communal d’Alsace et de Lorraine (CFCAL), which is provided via several loan brokers with Orias registration (a certification for finance professionals).

These include, for example, Arrago, who call it ‘Prêt 60’ because it is for over-60s, and Hyppo. Arrago offers it on homes worth €150,000 or more and will offer between 15% and 60% of the value as a loan.

It says the capital and interest – which accumulates over the borrower’s life – are repayable from their estate after death, but in the case where the total is more than the sale value, the heirs do not normally have to pay the difference. 

French Mortgage Xpress, based in Valbonne, Alpes-Maritimes, also offers this in partnership with Arrago.

Hyppo offers a PVH of between 15% and 70% with a minimum loan amount of €100,000.

It says borrowers must take into account, as well as loan interest, notaire fees for setting up the loan, which is secured against the property, expert’s fees for valuing the home and a broker’s fee.

PVH interest rates are variable but are often around 6%. The loan offers certain advantages compared to a standard French equity release loan which requires repayment during the borrower’s lifetime, or the viager sale, in which ownership is relinquished.

In the latter case, the property is sold outright to a buyer, for a reduced sum as they only take occupation on the seller’s death.

Typically, an amount of ‘rent’ is also payable to the seller during their life, however there is no possibility of passing anything to heirs.

Usually arranged via an estate agent, there is also the possibility of missed rent payments and the possibly off-putting feeling of selling to someone who is effectively betting on your not living very long.

Property investment firm Dillon is among large firms now promising a simple version of this, where they buy via viager directly (rather than looking for a buyer) and, in this case, Dillon offers a larger sum but does not pay rent.

Moving away from the PVH or viager, the firm Merci Prosper has a scheme whereby the company buys a partial stake in a property, between 10% and 50%, and pays a cash sum to the owner to use as they wish.

The contract lasts 10 years and specifies that at the end of the period the seller can buy back the share, sell the property to pay it off, or extend the agreement by paying a ‘rent’ on the share, which is then only paid back once the owner dies or sells the property.

Our thanks to reader Richard Morris for his tips which prompted this article.