Equity release loans

04.19.2017

Equity release loan is a new type of loan.

  • What is the equity release loan ?

    • The equity release loan is a loan made by a financial institution to a person, secured by a mortgage made on a residential property owned by the borrower. The amount may not exceed the value of the hypothecated immovable .

    • The funds lent by the bank may be withdrawn by the borrower either at once or in regular payments, every month or quarter for example.

    • The normal term for repayment of the loan is the death of the borrower. It is on this date that the heirs will have to repay the principal and pay the interest. However, it is now possible to provide for a periodic repayment of interest (Law 2015-992 of 15 August 2015).

  • The loan may end before the borrower dies under the following circumstances:

    • - Advance redemption,

    • - Sale, donation or dismemberment of the hypothecated dwelling,

    • - Loss of the value of the mortgaged property due to the borrower,

    • - Change in use of the hypothecated immovable,

    • - Refusal of access to the immoveable mortgaged to the banker to enable him to ascertain his good state of maintenance and conservation,

    • - Default in the periodic repayment of interest, if the borrower had opted for this formula.

This equity release loan system is intended for seniors with inadequate incomes but who own a home.
Of course this contract, considering its consequences on your inheritance (which can be totally absorbed if it includes only mortgaged housing) must be well studied, especially if you have children.

See also
29.11.2016
The letter of the notaries of France in the world / November 2016
25.01.2017
French property market report / N°34