Reversible LoanCancelable loan
Even though such loans are now an accepted practice in the UK and many other places, it is a small French property due to historical restrictions and a lender's reluctance to lend. Crédit Foncier, the specialised branch of the BPCE (Banque Populaire Caisse d'Epargne) commercial banking group, offers only one type of loan on the square.
Historically, with an interest of around 8%, charges of around 4% and a small loan-to-value of around 20% to 30%, their offering has not been particularly appealing. As few homes are willing to take up an offering on such bad conditions, Crédit Foncier recently launched the 4.8% flat interest newly, open to 60+ year old people.
Foncier Réversimmo" is the brand name of the new products. Amount of the loan depends on the value of the real estates and the old of the lender. During the term of the lender, no repayment of the loan would be necessary, with the burden being paid back in the event of his/her deaths. When the value of the realty exceeds the amount of the liability, the remainder is paid back to the heirs of the realty; when the liability is higher than the value of the realty, the differential is borne by the banks without heirs.
The heirs would also have the possibility to keep the ownership by paying back the debts. Or in other words, the debts would be reversible. As an example of the operation of the loan, Crédit Foncier mentions a pair of 85 and 83 year olds taking out a loan of 150,000 on a real estate with an estimate value of 320,000 euros.
Such an example would show that the loan fee would be 8,000 and the notarial and tax expenses associated with the loan would be a further 3,000, giving a combined 11,000 euros in the loan fee. Consequently, the base interest of 4.8% will become about 6% annually interest at around 6%, still a relatively high interest level, given the low general interest mortgages that are currently on the marked.
Also keep in mind that interest must be paid on all accrued interest, a figure that will rise significantly each year, which means that the ratio of debts to capital may vary over the years. Thus, if the value of the real estate does not rise at the same pace as the amount of debts, then the house value of your house will be controlled by the higher percentages.
In fact, these credits are available to anyone lawfully residing in France, since the bankrupt is prohibited from discrimination on the ground of citizenship. In the past, however, we have been receiving many emails from our readership saying that they have been denied such a loan by CF without explain. This may be due to the fact that most credits are given only to those located in a region with a large residential property supply, such as the Ile de France or the Côte d'Azur, but there may also be other factors.
It would be a great pleasure for us to know if you were denied such a loan.