Reader question: I am planning major renovation work to my French house. Is it possible to take out a mortgage to fund this, as opposed to an ordinary consumer loan? V.P.
Yes, it is possible, although often banks are only interested in giving a crédit immobilier (mortgage) for amounts of €50,000 or more.
In this case, it can be of interest due to low percentage rates and long repayment periods.
However, some kind of guarantee will be required, such as a caution or a hypothèque.
A caution means having someone guarantee to repay the loan if you default on it. It can be a person or, more usually, it is a financial institution to whom you pay a monthly fee. Banks will often have a partner organisation.
An hypothèque means having the loan secured against your home or other property. In this case, a legal right is registered by a notaire, at a fee, and the bank would have the right to sell the property to recoup the loan if you do not repay.
Borrower’s insurance, to cover repayments in the case of illness, incapacity or death, will also be required.
Usually, you would be having the work done by a firm, and the bank will pay it the money, rather than paying it into your bank account.
The alternative is one of various kinds of prêts travaux (loans for works), which are a form of ordinary consumer loan. They are likely to be at a higher interest rate but will offer more flexibility and the money could either be used to finance work you are doing yourself or to pay a firm.
These can include loans for a specific project (crédit affecté) or a personal loan to be used as you wish (prêt personnel non affecté).
There are also state-backed schemes that can help towards eco-friendly renovations, notably the MaPrimeRénov’ grant and the prêt avance rénovation.