Mortgage Update: French Mortgages for the Over-60s

Since the 1970s, France has been a property and lifestyle destination for retired and pre-retirees from overseas, particularly the UK. Every week we speak with clients in their 50s and 60s who are either looking for a holiday home or to retire permanently to France and enjoy in the sunshine. Last month we even heard from an elderly couple in the US where the husband was 80 and the wife was 95!

Although 60 isn’t considered ‘old’ anymore – with many people continuing to work well into their 70s, there are some extra considerations when looking to get finance in France. Simply put, it is harder and more expensive to get finance at the age of 65 than 55.

We spoke with David Carbuccia of Ambassador International Mortgages in Paris, about some of the hurdles a prospective borrower over the age of 60 might face when applying for a home loan in France.

Retirement horizon

David Carbuccia: “Most French lenders have direct age requirements because they appreciate how the borrowers’ retirement income will impact their affordability and debt-to-income ratio in the long run.”

Alistair Lockhart, Property Director at FrenchEntrée: “We talk to a lot of individuals and couples in their late-fifties and early-sixties who are still employed or self-employed, and earning a reasonable income. Any French lender is going to look at their ages and wonder (a) when they will be retiring, i.e. stopping work and (b) what the impact would be on their income. This is why the financial buffer of liquid savings or investments is very important to French lenders.”

Life Insurance

David Carbuccia: “Mortgage protection life insurance is usually mandatory, which impacts the annual percentage rate (APR). If you are over 60 you will be required to have what is known as a ‘Senior Policy. This will run alongside the mortgage, and increase in proportion with the risk insured and the borrower’s age.”

Maximum Loan Duration

David Carbuccia: “Most of the time, the maximum age at the end of a mortgage term can’t exceed 75 or 80 years old because the life insurance premium is much higher under senior policy, which impacts the APR significantly.”

Alistair Lockhart: “We’ve had a few buyers who have attempted to find a loophole to the age problem, and ask their son or daughter to be named on the loan as well. In most cases this doesn’t work, the bank will look at the date of birth of the oldest applicant to determine the conditions, not the youngest. Points for effort though!”

Maximum legal rate of interest

David Carbuccia: “French home loans are heavily regulated and subject to a legal cap, called “Taux légal de l’usure”. For example, fixed mortgages from 10 to 20 years amortizing cannot exceed 2.40% maximum APR, which greatly limits financing options for senior client”

(click on the links below for more detailed information):

https://www.economie.gouv.fr/particuliers/taux-usure

https://www.banque-france.fr/statistiques/taux-et-cours/taux-dusure

If you’re considering a French mortgage to finance your dream of owning a property in France, feel free to get in touch for an informal chat. You can either email us at [email protected] or complete our online enquiry form.

We look forward to hearing from you!