Buying property: types of loans and Bank guarantees
There are various types of loans granted by french banks: repayable loan, In Fine loan, bridge loan, home loan, loan agreement, PTZ, PEL ... In return, the bank can ask you for bank guarantees.
French bank loans
These reimbursements may include:
- fixed interest, definitively calculated for the entire duration of the loan;
- variable interest, indexed or dependent on interbank variations, capped or not.
On the contrary, no interest applies to certain “interest-free” loans. Allowed with requirements, they are only available to low earners and there is a limit to the sum borrowed.
The majority of loans granted by banks are depreciable. Here, the repayment is spread out over time: you repay both the capital and the interest throughout its duration.
In contrast, the "in fine" loan assumes that you only pay interest over the term of the loan. Thus, the capital is refunded only once at the end of the term. This system has a significant tax interest for heavily taxed persons. To settle the capital, it is possible to create savings associated with an investment product backed by life insurance.
French bank guarantees
The bank that lends you money can ask you for several types of guarantees:
- This may be a joint and several guarantee , either from a specialist company (legal entity) or from a friend or relation who guarantees the reimbursement of the said loan. The bank requires that the person be solvent, that is, able to pay the debts of the borrower on his own finances or on his property.
- However, the bank may also want to have property as collateral. It may be a lender's privilege, a mortgage or both.
Guarantees are taken out for the length of the loan plus one year. They then disappear automatically one year after the repayment of the last installment.
If the property is sold, for example, the entry on the mortgage registry is cancelled. The notaire draws up an instrument releasing the mortgage.
- I buy real estate in the province but I can not, for professional reasons, be present at the signing of the sale. I wish to give proxy to represent me. [...]
- I buy a property for which the mandate of sale provides that the payment of real estate agency commission is the responsibility of the seller. Why is this commission included in the base for calculating notaire fees?
- I am a tenant of my principal residence and owner of my second home. I want to sell it so I can buy a new home that I will assign to my main home. This residence is worth 300.000 €, but I still have 100.000 € of credit to refund. [...]
- Seven years ago, I had my house extended but I did not take out property damage insurance. I wish to sell my property but the notary tells me that I must personally guarantee the purchaser in case of occurrence of damage covered by the ten-year guarantee.