5 Alternatives to Traditional Mortgages When Real Estate Rates are Rising

After several years of low rates, interest rates for real estate are rising, making it harder for people looking to borrow. It may therefore be useful to look for alternatives to the traditional mortgage granted by a bank. Here are five options that can help you borrow more while lowering the cost of financing or monthly payments.

1. Help for the purchase of real estate thanks to the Zero Interest Loan (PTZ)

The PTZ is an aid for the purchase of real estate. It makes it possible to obtain an additional interest-free mortgage, in addition to bank financing. In the last quarter of 2022, eligible French people were able to benefit on average from a zero-rate loan of €51,828.

To obtain a PTZ, future borrowers must meet several criteria. First of all, the household income must not exceed certain thresholds, because the zero rate loan is reserved for low-income households. In addition, the financing only applies to the principal residence, whether it is a house or an apartment, provided that the property is new, to be built or renovated.

2. Loan to buy housing from Action Logement

Action Logement helps people with low incomes to buy a home. The Loan to buy a home from Action Logement has a low rate despite the general increase in real estate rates. Since March 1, 2023, the rate has been 1.5% without compulsory insurance, instead of 0.5%.

You can obtain up to €40,000 in financing if you meet the income criteria and if you buy a new main residence, a construction project or an old HLM housing with an A to E rating on the DPE. The limit is 40% of the total amount of the financial transaction.

3. From 3,000 to 15,000 euros thanks to pension funds

Pension funds can sometimes give money to help you buy a house or an apartment. According to Cafpi, the amount of aid is often between 3,000 and 15,000 euros, which you will have to repay in 5 or 10 years, sometimes 15 years.

There are conditions, but not only for pensioners. Active people can also receive this aid, depending on their work (employee, self-employed, civil servant, etc.).

4. Local aid to take into account

Some local authorities can help their residents to buy housing. The National Agency for Information on Housing, called Anil, has drawn up a map of France which lists the regional aid available. You can contact Adil, which is the branch of Anil in each department, to find out more. A local lawyer can help you understand the aid available in your area, explains Aurane Sérot, lawyer at Anil.

5. Family loans: formalities to be observed

When buying real estate, a family loan can be useful to get more money. Unlike a gift, the money has to be repaid and the lender may charge an interest rate, but it shouldn’t be too high.

There are formalities to be observed. If the amount loaned exceeds €1,500, a written contract must be drawn up, which can simply be between the parties, or call on a notary. If the amount loaned is more than €5,000, it must be declared to the General Directorate of Public Finance.