Buying and selling

Guide to Home Loans for Seniors in France

Posted at December 9, 2020

1 k views

When approaching retirement, real estate projects can be attractive for many reasons: getting closer to loved ones, seeking comfort better suited to age, or merely living in a new space. Although older people sometimes face difficulties in borrowing, the Senior market is booming, and banks are more inclined to give loans. To enjoy retirement in Paris, find out about the apartments available for sale.

Challenges for senior housing borrowers

Often, banks impose hefty deadline payments on the elderly. With a reimbursement age generally set at 75 years, the required contributions are higher despite the increase in life expectancy. Added to this is the risk of failing health, resulting in prohibitive borrower insurance prices. Fortunately, since the 2010s, the law facilitates bank loans to the elderly, and alternatives exist. Depending on the profile, everyone may be eligible for an offer or at least an option better suited to their situation.

Alternative solutions to get a home loan in retirement?

Thanks to the Lagarde law in 2010 and the Hamon law in 2014, it is possible to take out borrower insurance outside the banking system and even to change it within the following twelve months. Seniors can now study proposals best suited to their wallet or their state of health.

Here are several possibilities:

Convention AERAS: Insurance and Borrowing with an aggravated health risk

(AERAS : “s’Assurer et Emprunter avec un Risque Aggravé de Santé”)

This insurance allows people with fragile health (cancer, disability, etc.) to access borrower insurance for a fixed-amount mortgage loan of € 320,000, with repayment before the age of 70. In the event of death or inability to pay, the insurer takes over the payment of the monthly installments. AERAS insurance is the only one designed for Seniors who have health problems. It has the merit of existing.

Guarantor Mortgages: Guarantee by a close relative

Another solution for a Senior is having the surety of a loved one. This option is viable if the guarantor has enough funds to meet any possible default of monthly payments.

Lifetime mortgage policy explained

By already being a homeowner, the option of the lifetime mortgage loan is a possibility to evaluate. The life loan allows borrowers to borrow an amount on the mortgage of a property and immediately receive a loan capital to repay after that. This loan is ideal for a person without children since it allows the bank to repay the loan's principal amount and interest by selling the mortgaged property. The loan rate depends on the property's value, and a real estate specialist, therefore, assesses it. The subscriber must repay the credit before completing 90 years. The heirs will then pay off the mortgage's principal and interest, and if a certain amount remains after the sale, the rest goes to them.

How a mortgage with a guarantor works?

On the same principle as the life loan, the guaranteed mortgage loan allows the borrower to repay his loan like a traditional loan, that is to say, by monthly installments. On the other hand, on the owner's death, the property is sold by the bank to proceed with the full repayment of the loan.

Pledging property as collateral for a home loan

It is also possible to pledge your life insurance to a bank against a loan. It guarantees the bank that it can seize the property in the event of non-payment and sell it to repay the debt. If the senior has securities, a house, an apartment, shares, or savings accounts, he can also pledge them. By taking these options into account, each senior has an alternative to the traditional bank loan, which is often expensive or difficult to obtain. Thus, many choices exist for all profiles and budgets.