Non-standard mortgage scheme in France: features and advantages

July 14, 2021
Non-standard mortgage scheme in France: features and advantages
Not everyone knows, but in France there is a rather unusual program of buying and selling real estate in a mortgage.

Not everyone knows, but in France there is a rather unusual program of buying and selling real estate in a mortgage. The essence of such a scheme is that the buyer must pay the first installment, after which the remaining amount is divided into equal payments. But there is one caveat – you need to pay them only while the seller is alive. After his death, the housing automatically becomes the property of the buyer, and it is no longer necessary to continue making payments.

Such a scheme has been available in France for a long period of time, but no one has actively used it. Only 1% of French investors chose this program for the purchase of housing. However, it is worth noting that during the COVID-19 pandemic, when the mortality rate among the elderly increased, those wishing to purchase housing under such conditions increased.

Features of the scheme, pros and cons

This option of registration of a purchase and sale transaction has both advantages and disadvantages. One of the advantages is that the buyer does not need to take out a loan for housing and pay interest for it. In addition, there is no need to make monthly payments. The amount remaining after the first payment can be divided into any convenient number of payments.

The program also has disadvantages, although they can only be called such for the buyer. The main ones are:

  • the seller has the opportunity to stay in his house or apartment until his death, while he will receive regular payments from the buyer;
  • if the buyer passes away before the seller, the obligation to pay the remaining amount is imposed on his relatives.

The cost of housing that is sold under such programs is often lower than the national average. This is one of the main advantages due to which the scheme is used.

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Alexandra Meyer
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Alexandra Meyer
Personal assistant