Buying property with the Enhanced interest-free loans (PTZ)
The PTZ (or "Enhanced interest-free loans") is a state-regulated loan with no interest. It is conditionally awarded for the acquisition of a principal residence or the financing of certain works.
Who is eligible to take out a Enhanced interest-free loans (PTZ)?
PTZ interest-free loans are only available for first-time buyers or individuals who have not owned their main residence for the last two years, whose financial resources satisfy certain criteria. However, this condition in not required in the case of individuals :
- who hold a disabled person's card,
- who are in receipt of adult disability benefit, or benefits made available for persons bringing up disabled children or disaster victims. The loan must be used to purchase a property that will be the buyer's main residence.
- or if it occupies a housing that has been a disaster (natural or technological, for example) and is, therefore, become permanently uninhabitable.
Be careful, getting a Enhanced interest-free loans is not right. The bank will assess the solvency of the applicant.
Enhanced interest-free loan : what are the resource ceilings and conditions?
The loan cannot be used to finance 100% of the purchase and the borrower will have to take out an additional loan or a personal contribution.
The borrower's resources must not exceed a certain upper limit, which will depend upon the location of the property (zone A, B1, B2, or C) and the number of occupants.
For example: in the case of a household consisting of three people wishing to benefit from a PTZ intended to finance a property located in zone B2, their income must not exceed €45,900.
In 2016, the Enhanced interest-free loan is extended to almost the entire country, with an increase in the income ceiling (in euros):
Enhanced interest-free loan : resource ceilings to respect
|Number of persons destined to live in the property||Zone A||Zone B1||Zone B2||Zone C|
|8 and more||€118,400||€96,000||€86,400||€76,800|
Source : French Housing Ministry
Which housing can benefit from the Enhanced interest-free loan?
The accommodation must be the primary residence of the borrower for a period of 6 years from the payment of the loan (however, this condition can be relaxed in certain cases, particularly when the loan is used to finance housing destined to become the main residence the purchaser at the time of his retirement). After this period, it can be rented. The property must become the borrower's main residence, no later than one year after the works have been completed or the property purchased or one year after the date of acquisition of housing if the latter is later.
Enhanced interest-free loan can sometimes be used to finance the purchase of certain old property:
- the purchase of an old property with important works assimilating it fiscally to a new premises;
- the transformation of a premises, new or old, into housing (assimilated fiscally to a new premises);
- an old property whose works represent 25% of the total cost of the operation (ie at least one third of the purchase value of the property only). This work corresponds to the creation of additional living space or the modernization, renovation or development of living space or energy saving work.
A "PTZ loan" can also be used to finance part of the purchase of a property that was formerly let as social housing.
How to calculate the Enhanced interest-free loan?
In order to determine how much can be borrowed under the PTZ scheme, a percentage is applied to the maximum cost of the operation, subject to a certain upper limit. The cost includes the construction or the purchase price and the negotiation fees . The authorised percentage will vary depending upon the geographical zone (A, B1, B2 or C) in which the property is located.
For example: for a household with three people who wish to acquire a property located in zone B2, the maximum amount of the PTZ loan will be €187,000. The maximum cost on which the PTZ x 40% (max percentage) = €74,800.
When does the Enhanced interest-free loan have to be repaid?
The borrower has a deferred reimbursement 5, 10 or 15 years depending on their income and rental housing. Thus, the total length of the loan can be up to 20, 22 or 25 years.
More income of the borrower, the higher the loan period is short.
It should be noted that if the beneficiary of the loan sells their property in order to buy another one, they may ask for their PTZ loan to be transferred to the new property (subject to the agreement of the bank that provides the loan).