3. French Mortgage Loan Guarantees

1. 3.1. Conventional Charge
   3.2. Priority Lien Charge
   3.3. Institutional Guarantee

3.2. Priority Lien Charge - Hypothéque de privilège de prêteur de deniers

The origins of this type of security go back to the middle ages, hence the strange name given to it of hypothéque de privilège de prêteur de deniers.

So it cannot be used for off-plan sales, improvement or conversion works, or for the construction of a new house.

It is the mortgage of first choice by the French as it is cheaper than a conventional mortgage. However, on the downside, 'equity withdrawl' mortgages are not possible with this type of mortgage. Thus, if you wanted to borrow more against the value of your property to carry out improvement works, you would need to change to a conventional mortgage.

As with a conventional mortgage the legal process is undertaken by a notaire, but the fees are less (about 1%) as there is no requirement to pay stamp duty, called publicité fonciere.

It is also possible to obtain this mortgage on a term of up to 50 years, higher than the normal maximum of 35 years for a conventional mortgage.

The mortgage charge is registered on the property in the same way as a conventional mortgage and will take priority over all over mortgages on a property.

As with a conventional mortgage above, it is also necesssary to pay for the release of the mortgage charge once the loan is repayed, or allow it to lapse after two years.

The usual broker/lender arrangement fees are payable.