First-time buyers
Family loan for the deposit: how to draft it, declare it and present it to the bank
A family loan complements the deposit, but the bank counts it as a debt. How to draft it, declare it, choose the repayment schedule and present it.
A family loan complements the deposit, but the bank counts it as a debt and adds its repayment schedule to the outgoings. It must be written before the transfer, by way of a debt acknowledgement or a loan agreement stating the amount in words and figures; its declaration is verified on impots.gouv.fr; it is presented with the written document, proof of the transfer and a repayment schedule that the file may include.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
Key points
- In the funding plan, a family loan reduces the deposit required from the bank; in the debt-to-income ratio calculation, it is an additional debt, taken into account in full.
- Only the repayment schedule written in the debt acknowledgement counts for the bank, never the oral arrangement that accompanies it.
- The written document must state the identity of the parties, the amount in words and figures signed by the borrower, and the outcome in the event of resale or death.
- Presenting a family loan as a gift to reduce the debt-to-income ratio is a false declaration and a source of dispute during an estate settlement.
- Each institution interprets a deferred repayment or one settled upon resale differently: the question must be raised before drafting the written document.
A family loan complements your own contribution if the bank finds it written, documented and legible. Settle it before the preliminary sale agreement: this is a classic of the first-time purchase.
Does a family loan count as a contribution?
In the financing plan, yes. In the debt-to-income ratio calculation, no: it is an additional debt, which may reduce your borrowing capacity.
Dans la lecture habituelle des prêteurs, les échéances d'un prêt familial s'ajoutent à celles du prêt bancaire au numérateur. C'est l'échéancier écrit dans la reconnaissance de dette que la banque retient, pas l'arrangement oral qui l'accompagne.
- En vigueur depuis le
- Source
- Décision D-HCSF-2021-7, art. 1er — Légifrance
Loan or gift: choose clearly
Never the in-between: a repayable “gift”, a “loan” that no one will claim.
| What changes | The gift | The family loan |
|---|---|---|
| For the lender | A contribution, without a burden | A contribution, with a monthly burden |
| For the person helping | The sum leaves their assets permanently | The sum returns to them, according to the schedule |
| For the siblings | A question to ask the notary: how the gift will count in the succession | A question to ask the notary as well, with the written document in hand |
| The expected written document | Declaration of gift or notarial deed | Acknowledgement of debt or loan agreement |
Does the person helping need to get their money back? The loan. Otherwise, see the family donation.
How to draft a family loan?
Sign an acknowledgement of debt or a loan agreement before the transfer. Article 1359 of the Civil Code requires a written document for amounts exceeding a threshold set by decree.
The written document must contain:
- The identity of the lender and the borrower. If there are two borrowers, specify who is borrowing.
- The sum, written in words and figures, in the borrower’s handwriting; otherwise, the document does not constitute proof (Article 1376 of the Civil Code).
- The date and method of transfer: a bank transfer, never cash.
- The interest, or its absence.
- The repayment schedule: amount, frequency, first and final instalment.
- The fate of the loan in the event of resale or death.
Then, check on impots.gouv.fr whether it must be declared, and have it registered: it then binds the other heirs (Article 1377).
What the bank checks
The written document, proof of the transfer, and the declaration if it is due. It may trace the origin of the funds, as for any personal contribution. Then the repayment schedule determines the outcome.
| Written repayment schedule | What the bank does with it | The risk |
|---|---|---|
| Instalments from the outset | It adds them to your outgoings, in full | A borrowing capacity reduced accordingly |
| Repayment deferred for a few years | It may still retain the future instalment | An outgo that arrives when moving costs are still a burden |
| Lump-sum repayment, at term or upon resale | Interpretation varies from one institution to another | A full sum to be found on a fixed date |
Enquire with the bank before drafting. Never disguise the loan as a gift: reduce it, spread it out, or declare part of it as a gift.
What the written document prevents
- Death of the lender: the heirs do not dispute the nature of the sum.
- Separation: the written document states who borrowed.
- Difficulty in repaying: a dated and signed amendment is sufficient.
- Resale: the written document states whether the balance is due upon sale.
I make the family aid work for your application
I am a mandate holder for a mortgage intermediary: the deed and the tax advice fall outside my role. I calculate the supportable family instalment, I compare the loan and the partial gift, I enquire with the bank in question and I gather the documents: written document, transfer, declaration (the complete list).
Also to avoid: first-time buyer application errors. The fees.
Are your relatives ready to help? Create your application or adjust the repayment schedule by telephone.
Sources
Read next
- How much can I borrow? Mortgage capacity in Lyon
- Donation from parents for the down payment: ensuring the gift is recognised without delaying the application Family gift for the down payment: documents proving the origin of funds, what must be declared, and what to ask the notary before the transfer.
- Unlocking your PEE or PER to buy your main residence: a step-by-step guide Your PEE, and under certain conditions your PER, can be unlocked to buy your main residence: documents, timeline, net amount, and how the lender interprets it.
- Buying without a deposit in Lyon: in which cases is it still possible Buying without a deposit in Lyon: the profiles still financed, what the lender requires in compensation, and the six situations where the answer remains no.
- First-time buyer mortgage application: the 7 errors that lead to rejection, and how to correct them in time Overdrafts, consumer credit, change of employer, untraceable gift, badly set sale agreement: what can be fixed before submission, and how fast.
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