« Equity release » a la Française

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The French government is working toward creating 2 new financial agreements : a new ordinance should be signed in spring 2006 to authorize the “Credit Hypothecaire Rechargeable” and Pret Viager Hypothecaire”. These  should be in place by the end of this year or the latest early 2007.

The “Credit Hypothecaire Rechargeable” is similar to equity release and works on the basis that you can re-borrow the amount of money you have already paid of your mortgage.

This money could be used for a renovation project or for inheritance or for personal loans. It cannot however be used to clear credit cards debts or to pay off a commercial loan. 

The”Prêt Viager Hypothécaire”(reverse mortgage)will enable the borrower to release the capital in their property in their later years to allow them to improve their lives , re-plan their finances or perhaps transfer funds to their children or grandchildren.

The capital along with interest would be payable in full upon death or in cases which have yet to be defined. 

A visit to the notaire will be required for each new credit and they should make you aware that your property will be at risk if you don’t keep up with the payments. The government are to decide if the fees for the “hypotheque”(security) can be reduced. 

Although these mortgages are not expected to be available before next year, there are at present a very small number of banks who could provide the “Equity release” facility.