What is a 0 rate loan?
The loan rate 0, also called “PTZ” is an interest-free loan granted to natural persons, set up in 2005 to facilitate access to property in first-time accession.
This loan concerns the acquisition of a principal residence by the purchase of new housing or the purchase of old housing (meeting certain criteria). In addition, obtaining a loan rate 0 is subject to conditions. It can not be the only way to finance the purchase. It should therefore be supplemented by other contributions such as a bank loan, a housing savings loan, a social loan or a personal contribution. The terms of the loan at rate 0 are set by articles L.31-10-1, and following as well as articles R.31-10-1 and following, of the code of construction and housing.
What are the terms and conditions for obtaining a 0 rate loan?
The rate 0 loan finances the acquisition of a principal residence, ie a dwelling that must be occupied for a maximum of one year after the acquisition, for a minimum period of 8 months. This period of 8 months can be reduced in case of force majeure, for health reasons or in case of professional obligations.
This principal residence must be the residence of the borrower, as well as of all persons who will occupy the dwelling, for a period of 6 years from the date of obtaining the loan. The borrower does not have the right to rent this residence during the 6 year period. Nevertheless, as with the annual occupancy period, this period may be reduced if the borrower has to leave his dwelling due to:
- Death or disability of a person in the household;
- Divorce or dissolution of a PACS;
- Unemployment lasting more than one year;
- Occupational mobility (journey of more than 50km or duration greater than 1h20 between housing and the new workplace).
The loan at rate 0 is granted to people who have not owned their principal residence in the last two years (supporting documentation: rent receipts, certificate of accommodation on honor etc. …). Nevertheless, there are exceptions. The loan at rate 0 can therefore be granted to any borrower:
- Justifying a disability category 2 or 3 as described by Article L.341-4 of the Social Security Code;
- Justifying an allowance for a child or disabled adult as indicated in Articles L.821-1 to L.821-8 and L.541-1 to L.541-3 of the Social Security Code;
- Having been victims of natural and / or technological disasters as well as the victims of an expropriation of extreme emergencies in the case where the main residence is uninhabitable (according to article R.31-10-3).
The loan at rate 0 is granted according to the total amount of resources of all people brought to live in this new housing. In addition, the marital status does not affect the calculation of the number of persons (the couple is therefore considered as two persons and not as a common entity). A child to be born in the home is, moreover, taken into account in the number of people.
Table of resource ceilings as at 1 January 2016, according to the number of people in the household and the geographical area determined by the order of 30 September 2014.
What types of housing are funded?
The loan rate 0 can finance new homes but also old housing if they meet certain conditions.
For new housing, the loan at rate 0 can be used for the construction of housing (from the purchase of plans to finalization), accompanied by the acquisition of the land. It can be used for the purchase of a new home completed for a first occupation but also to transform the premises into habitable dwellings and finally the acquisition of a home of a contract rental accession.
In the case of old housing, since January 1, 2016, the law is more flexible and now covers all geographical areas. Nevertheless, only two types of property are concerned by the loan at rate 0:
- Social housing in the case where the borrower acquires his own dwelling or housing belonging to his lessor which is located in the same department;
- Housing requiring the completion of work.
The works must represent at least 25% of the total cost of the operation and concern the creation or development of living space or annexes, modernization or the realization of work to save energy (except for the work involved by the eco loan rate O). The borrower will have to provide evidence to his credit institution. Thus it will have to provide a certificate on the honor conforming to a precise model (to inquire with the organizations) as well as all the specifications justifying the provisional amount of the costs of the works. Once the work is completed, the latter must provide the invoices justifying the work. The borrower also has 3 years to complete the works following the acquisition, in the opposite case he will have to repay the sum borrowed in its entirety.
How is the loan amount at 0% calculated?
As in the case of obtaining the loan, the amount of the loan at rate 0 will be fixed according to the number of people occupying the home, the resources of the latter, the total cost of the operation and the geographical area (A, B1, B2 or C) as determined by the order of September 30, 2014.
When calculating the amount of the loan at rate 0, the sum used as reference “resources” will be at the highest amount of the following two amounts:
- The amount of the resources of year n-2 (ie 2014 for 2016) of all persons destined to live in the future housing including those who were not previously attached to the tax home;
- The cost of the transaction divided by 9. This cost is the amount of construction or purchase plus trading fees. To date, notary fees and registration fees are not taken into account.
Ceiling of the total cost of the operation according to the zone and the composition of the outbreak
The amount of the loan at rate 0 is capped at 40% of the total cost of the operation. It is reduced to 10% for housing HLM.
What is the repayment term?
The length of repayment is also dependent on the household’s resources, the number of people in the household and the geographical area. This duration varies from 20 to 25 years, consists of two periods: a first period during which the borrower does not repay (ranging from 5 to 15 years depending on the borrower’s situation) and a second repayment period s spread over a period of 10 to 15 years.
To determine the repayment duration, the resources of the year n-2 of the household are taken into account. If this amount is less than 1 / 9th of the total cost of the transaction, the amount withheld is the higher of the two. This amount will then be divided by the family quotient, depending on the number of people in the household. From these calculations 3 tranches were defined in 2016.
In tranche 1, the total period will be 25 years, with deferred monthly payments of up to 15 years on 100% of the loan (ie a repayment period of 10 years). In tranche 2, the total duration increases to 22 years and the maximum duration to defer the monthly payments will be 10 (12 years for the repayment period). Finally, for tranche 3, the entire rate 0 loan will be 20 years with a grace period of 5 years (ie 15 years for repayment).
Where to get a loan at 0 rate? What are the advantages and disadvantages?
Any credit organization, such as large banking networks, that have signed an agreement with the State can issue a loan at a rate of 0. The borrower then has the possibility to deposit his file in any establishment, even if the latter is different from his bank. It is important to remember that the credit agency reserves the right to refuse the loan application. This establishment also has the right to require the borrower to subscribe to disability-death-incapacity insurance. The borrower has the option to subscribe to this insurance in any establishment. Although this loan is interest-free, there are some costs to the borrower, such as the guarantee deposit for the 0-rate loan.