Mortgage housing: for a calm and secure mortgage loan

The company Crédit Logement, specializing in mortgage loan guarantees, is a key player in the residential real estate financing market in France. This alternative to traditional mortgages offers numerous advantages for both borrowers and banks. The company's director, Jean-Marc Villon, discusses the principles behind this guarantee.

Obtaining a mortgage loan

When obtaining a mortgage loan, banks in most cases (about 95%) require guarantees from the borrower. Previously, this was done through a mortgage. However, for over 45 years, Crédit Logement has provided borrowers with the option to use a guarantee in the form of a surety. The alternative mortgage ensures that banks can recover the loan in case the borrower fails to meet their obligations. Crédit Logement operates neutrally and benevolently, aiming to facilitate mortgage financing for both the borrower and the bank. Additionally, the company works exclusively in the residential real estate sector (primary residence, secondary housing, or rental properties).

Advantages for the borrower

For the borrower, this provides several advantages. Firstly, the guarantee is less formal, as it is based on a private agreement. Therefore, the process is faster, simpler, and cheaper than using a mortgage. Secondly, the guarantee is an active assurance, as it accompanies the borrower throughout the entire term of the mortgage loan. When the borrower encounters difficulties in repaying the loan, Crédit Logement works together with them and their bank to find an amicable solution. Unlike a mortgage, which ends in eviction and complete loss of property, Crédit Logement engages in dialogue and makes every effort to find solutions. In 50% of cases, a resolution is found to get the loan back on track (for example, through restructuring, selling other property, etc.). We often find it easier to establish a neutral contact with the borrower, as we have no prior experience interacting with them. Our neutrality and goodwill, to some extent, explain our success. Another advantage is that if the borrower sells their property before the loan term ends, they will not have to pay additional costs. Crédit Logement truly supports the borrower throughout the entire term of their mortgage loan, helping them navigate various situations such as changes in personal circumstances, partial early repayment, property sales, financial difficulties, and so on, all without additional costs.

Advantages for the bank

For the bank, this also has its advantages. Before the bank makes a decision on granting a loan, we check the borrower's creditworthiness. Then we guarantee the full amount of the loan, and in case the borrower fails to meet their obligations, we immediately pay out the money. As a result, the bank does not experience delays and bears the risks.

Differences from competitors

What sets us apart from our competitors? Our operations are based on the principles of solidarity. We are funded by a mutual guarantee fund, to which each borrower contributes. This is a risk-sharing system among borrowers. At the end of the loan term, we return a portion of the borrower's initial contribution, which is our unique feature. Currently, the refund amounts to 76% of the borrower's initial contribution. Moreover, while our competitors are bank branches, we work with all banks in the market. We allow banks to offload risk on a freelance basis. More than 200 partner banks can offer Crédit Logement guarantees throughout France. Since 1975, over 10 million borrowers have been able to secure their loans and realize their housing projects without a mortgage. Today, we guarantee every third mortgage loan. This allows us to have a broad database on the real situation in the market. The observatory for financing the residential real estate market. We have an extensive real-time database about the market. Our figures accurately reflect current practices. They can serve as a useful source of information for various participants in the residential real estate market in France. Therefore, every quarter, Crédit Logement organizes a press conference on this data. And every month, we publish the Report on the Financing of the Residential Real Estate Market in France, which includes real-time statistics: interest rates and loan terms, in particular. In September 2023, interest rates were 3.98%, compared to 3.80% in August; they continue to rise, while loan terms remain stable (just over 20 years).