Loan secured by real estate: loan for a term of more than 30 years is possible

A debt level that should not exceed 35% of income, and a maximum loan term of 25 years (or 27 years in the case of a major job). These are the criteria established since the beginning of 2022 by the Supreme Council of Financial Stability, the famous HCSF standards for issuing real estate loans. But banks can deviate from this by 20% of their production.

As the sector recovers, some institutions are taking advantage of this flexibility to differentiate themselves in the lending market by allowing them to borrow over 30 years. At least this is the case with two regional savings banks, Normandy and Ile-de-France.

Reduce your monthly payments or increase your creditworthiness

The latter, France’s largest savings bank, has for a week been offering only first-time homebuyers under 35 the opportunity to take out a loan for more than three decades at a rate of between 4.35% and 4.35%. 0.75%, depending on profile. “The idea is that there should only be a difference of 0.10% between the rate scale for a term over 25 years and the rate scale for a term over 30 years, to prevent the benefit of the extension from being eroded by the cost of the loan,” explains Alexandre Castañon, marketing director. from Caisse d’épargne Ile-de-France.

Thus, extending the loan term allows you to reduce monthly payments, which, due to the level of interest rates, are now much higher than two years ago. Thus, for €250,000 borrowed over 30 years, the monthly payment is €100 less compared to a loan over 25 years. By increasing lending capacity, “playing over time also makes takeover projects possible, especially in sectors with high property prices” such as the Paris region, adds Julie Bachet, CEO of brokerage Vousfinancer.

“This proposal allows us to differentiate ourselves from other banks,” continues Alexandre Castagnon of the Caisse d’épargne Ile-de-France. Before reassuring those who may be intimidated by this commitment over such a long period. “This could allow people under 35 to become owners,” he says. And during the term of the loan, nothing will prevent you from increasing your monthly payments and thereby reducing the term and cost of the loan. » Moreover, the average period of ownership of the first property in Ile-de-France is less than ten years.