As the conditions for obtaining a loan become more numerous with age, the use of life mortgage loans can become a real alternative for people seeking financing.

 “Life mortgage loan is a contract by which a credit or financial institution grants a loan to a natural person in the form of capital or periodic payments” (Art. L315-1 of the Consumer Code).

NB: In practice, banks offer loans in the form of capital.

The mortgaged property must be for “exclusive residential use” either occupied by the borrower if it is his main residence or leased to a third party if it is a secondary residence or rental property. This type of financing will be interesting for future or young retirees who want to improve their income or finance personal needs.

But then what are the differences with the classical viager?

The classic life annuity is to sell real estate property to a third party in exchange for the payment of a periodic life annuity and a bouquet. For the life mortgage, the borrower remains the owner of his property and has the option to make an early repayment of his loan at any time. This solution is more like an alternative to a classic loan but intended for profiles that are no longer banked with the usual solutions. The loan is secured by a mortgage on the borrower’s real estate. In this type of financing, borrowers are not obliged to be insured, which is a real advantage in case of health problems or a little later age.

NB: the property in question must no longer serve as a guarantee to support the mortgage.

But then how much does it cost?

In concrete terms, interest is generated in borrowed capital as a conventional loan. This type of loan is atypical and does not require insurance for borrowers, and can be used by people of a certain age, the institutions offer interest rates that are around 6%/year. Regarding the repayment terms, it may only be required upon the death of the borrower, or a dismemberment of the property of the mortgaged immovable. However, the borrower may also decide to make a prepayment.

NB: “This contract may also provide for the same arrangement with a periodic repayment of interest only.” Subject to the lender’s acceptance.

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