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A chaque étape de la vie, il peut être nécessaire de faire appel à une banque pour être accompagné financièrement, afin d’avoir les moyens financiers de réaliser ses projets. Mais pour un prêt à la retraite est-ce différent? Un prêt personnel, un prêt viager hypothécaire, comment ça fonctionne, et surtout y a-t-il un âge maximum pour en souscrire un?
Thanks to the bank loan, it is possible to have a financial capital immediately, without waiting to have accumulated the necessary savings. Thus, paying for your studies, acquiring your main residence, buying a car, financing work, having a payment facility for back-to-school or Christmas purchases, are all personal projects that can be candidates for a bank loan. On the professional level as well, when starting a business, a medical practice, or opening a store, a bank loan allows you to have the funds to launch your activity.
At every stage of life, it may be necessary to call upon a bank for financial support in order to have the financial means to carry out one's projects. Thanks to the bank loan, it is possible to have a financial capital immediately, without waiting to have accumulated the necessary savings. Thus, paying for your studies, acquiring your main residence, buying a car, financing work, having a payment facility for back-to-school or Christmas purchases, are all personal projects that can be candidates for a bank loan. On the professional level as well, when starting a business, a medical practice, or opening a store, a bank loan allows you to have the funds to launch your activity.
Bon à savoir: le mot« crédit » nous vient du latin « credere » (croire) et nous rappelle que l'opération est basée sur la croyance par le créancier que le débiteur sera en mesure de rembourser sa dette.
Banks play a fundamental role in financing household projects by granting loans thanks to the money deposits they receive from their customers. In September 2022, credit to individuals in France represents an outstanding amount of €1,500 billion. Every month, more than €20 billion in loans are granted to individuals, and almost one household in two has at least one property or consumer loan (1).
In exchange for the money loaned, banks charge interest that will be repaid in addition to the principal loaned. Interest can be seen as the cost, or the price of the service provided by the banking institution to the borrower. Since the end of 2008, when interest rates on real estate loans averaged 5.07% (2), the decline has been almost constant, reaching a low point of 1.03% in October 2021. The year 2022, marked by the war in Ukraine and the return of inflation, saw rates rise again to reach, at the end of 2022, the level of early 2015. In France, the interest rate is capped by a limit called the "usury" rate. It represents the rate that lenders cannot exceed, and is published quarterly by the Banque de France.
On distingue principalement deux types de prêts pour les particuliers: les prêts immobiliers, et les prêts à la consommation. Tous deux ont des objectifs différents, et les règles qui encadrent l’octroi et le remboursement de ces crédits sont adaptées à ces objectifs spécifiques. Le prêt à la consommation est utilisé pour des projets ou des besoins non professionnels et est plafonné à 75.000 euros. Il peut s’agir d’un prêt personnel qui permet une utilisation libre des fonds, d’un crédit affecté comme par exemple un prêt pour l’acquisition d’une voiture, ou d’un crédit renouvelable souvent associé à une carte de paiement. Pour en savoir plus, n’hésitez pas à consulter les différentes rubriques disponibles sur le site de la Banque de France.
Most of the major banks offer a very complete range of loans, but some more specific loans are offered in a more confidential manner, such as the life mortgage.
The objective of the institution granting the credit is to secure the repayment of the credit and the interest charged for servicing the credit. Credit institutions seek to protect themselves as much as possible from the risk of default, i.e. the impossibility for the borrower to honor his debt.
The credit institution will therefore be able to put in place protections. Firstly, it will ensure that the borrower is able to pay the monthly loan instalments thanks to his monthly income. If the amount of the monthly payments is too high, in proportion to the income, the risk of non-repayment will be higher, even too high for the bank. The bank will therefore look at your debt ratio.
Second protection, the guarantee. The bank will seek to be reimbursed even if the borrower is no longer able to pay his monthly instalments, for example in case of death. To do this, the most common solution is to require the borrower to take out insurance, which will take over in the event of a problem. This is called the borrower's insurance, or credit insurance, which can be offered by the bank itself or by insurance companies. This insurance is not legally required, but the banks will often demand it as a condition for a real estate loan.
For real estate loans, the bank may require a guarantee, to ensure the payment of the monthly instalments of your credit, in case of default on your part. It can be a bank guarantee or a mortgage. Most of the time, you will be directed towards the Crédit Logement guarantee. The mortgage is more often used for the financing of a new house.
At retirement, income drops sharply, by 30% to 40% as calculated in the latest report of the Conseil d'Orientation des Retraites. Thus, the monthly credit payments are more at risk. Moreover, with the increase in the risk of death with age, death insurance will be more expensive for older people, and it will even be impossible to take out death insurance beyond a certain age. Traditionally, banks limited enrollment to age 70, and coverage ended at age 75 at the latest. With the increase of life expectancy and the stronger competition of delegated insurance, you can find insurance until the age of 85, with a maximum age of 90, but the cost of the insurance increases very strongly in these age brackets. Thus the retirement loan is more complicated to obtain, and more expensive...
In theory, there is no maximum age for borrowing. In retirement, there are many projects or financing needs that would require a loan. You want to renovate your home, you want to buy a new car, a motor home, you want to take advantage of your free time for your leisure activities and your travels... Very often the real estate loan is no longer the main need, but the personal loan could be useful for many seniors.
At the beginning of retirement, banks are still quite flexible on granting credit, but beyond the age of 75, it becomes very complicated and often quite hopeless to be financed by bank credit, for the reasons mentioned above. The life mortgage loan, introduced in 2006, allows you to obtain a loan in exchange for a mortgage on your property, and this in a lifetime manner, i.e. the repayment will be made at the time of death. This solution remains very difficult to access and is not very widespread in France. Dillan offers an alternative solution that allows you to monetize your real estate assets to access the financial capital needed for your projects.
(1) Economic studies of the French Banking Federation
(2) The Crédit Logement Observatory
