7. Subsidised French Mortgages

1. 7.1. What are Subsidised French Mortgages?
   7.2. Interest Free Mortgages
   7.3. Employer Loans
   7.4. Social Loans
   7.5. Paris Loans
   7.6. Home Purchase Savings Plans

7.2. Interest Free French Mortgages - Prêt a taux zéro

7.2.1. Purpose of Loan

This type of mortgage is one of the chief instruments the French Government is using to try and encourage home ownership in France. The loan can be used for the purchase of a new or older property, including those needing renovation.

Accordingly, as a condition of granting the loan the property cannot be rented out as a furnished letting, or be let on a seasonal basis.

7.2.2 Eligible Persons

Eligible groups on a means tested basis are first time buyers, those who have not been homeowners for the past two years, disabled persons, or those whose home has been destroyed by a natural disaster, e.g. flooding. In the latter case the application must be presented within two years of the official declaration of the natural disaster.

7.2.3 Income Thresholds

There is an upper income limit, which varies according to household size and the location of the property. The income limits have recently been substantially revised upwards.

In the provinces the current (2008) maximum income for two people is €31,558, whilst for a family of four it is €40,488.

In the Ile de France these income limits are €43,750 and €56,875 respectively.

The income figure used for assessing eligibility is the revenu fiscal de référence on your French income tax return.

The reference period for assessing income eligibility is the proceeding year for those seeking mortgage offer between April and December, and two years previously for offers between Jan and March.

7.2.4. Maximum Amount of Loan

The maximum amount of the mortgage is the lower of 20% of purchase price, or 50% of other mortgages, with an upper loan amount.

The maximum amount of the loan is relatively low, as the interest free mortgage can only be used on a complementary basis to that of the principal loan.

The amount varies according to the size of the household and location of property, and whether it is a new or existing property.

For a two person household in the provinces the maximum loan for an older property is around €12,000, which increases to €16,500 for a new property.

This amount increases for a larger household, and for properties in Paris and the Ile de France, France/Switzerland border areas, or the Cote d’Azur.

The maxium loan amount can be increased by up to a further €15,000 for the purchase or construction of a new home, on condition that the local authority is itself prepared to make a contribution in some form towards the acquisition, e.g. cheap land. There is also a tougher income test for this additional facility.

7.2.5. Fees

There are no fees associated with provision of this mortgage.

7.2.6. Application

Visit your local bank or make enquiries to any other mortgage lender.