They sold the house, kept the loan at 1%, and bought a new apartment without informing the bank.
🏡 How it all started
In 2013, Delphine and her husband, both working in the industrial sector, built a country house in the Auvergne-Rhône-Alpes region, 30 minutes from the city. “We found a very cheap plot and approached a small builder who constructed a 120 m² house with a 1700 m² garden. The total cost was between 280,000 and 300,000 euros,” recalls Delphine.
To finance the project, the couple took out a loan of 180,000 euros at 2.5% for 20 years. However, after four years, they decided to refinance the loan. “We approached a broker and managed to lower the rate to 1% by changing banks,” says Delphine. This reduced their monthly payment by 150 euros.
🏙️ The decision to sell the house
In 2023, after 10 years, the family decided to move to the city center within the same region. They honestly informed the bank about selling the house and their desire to keep the current loan for the new purchase. Initially, the bank had no objections, but a week later, they were warned that this was not allowed.
💰 The trick to keeping the favorable loan
The couple ignored the bank’s warning and did not read the contract terms closely. “They offered us a 4% rate on the remaining 100,000 euros, which seemed too expensive,” explains Delphine.
The couple sold the house for 440,000 euros, making a substantial profit. To avoid drawing the bank’s attention, they did not change their mailing address and stopped issuing checks. They transferred the proceeds from the sale to another bank.
🏢 Buying an apartment without a loan
In the same year, they bought a 100 m² apartment with three bedrooms for 350,000 euros. “We won among other buyers because our offer was not conditional on a mortgage. We paid everything in cash,” says Delphine.
⚖️ Risks and possible consequences
Although the couple is pleased with their trick, their actions are illegal. “The agreement between the borrower and the bank governs the loan obligations,” reminds the French Banking Federation. If the bank discovers the violation, it may demand early repayment of the loan.
By law, the sale of real estate purchased with a loan requires its full repayment, unless the contract contains a clause allowing the transfer of the loan to a new property. However, even in this case, the bank must give its consent.
Currently, there are no clear norms or court rulings on this matter, but experts warn that such schemes could lead to serious problems.
📞 Contact me if you wish to buy or sell property in France.
🏡 How it all started
In 2013, Delphine and her husband, both working in the industrial sector, built a country house in the Auvergne-Rhône-Alpes region, 30 minutes from the city. “We found a very cheap plot and approached a small builder who constructed a 120 m² house with a 1700 m² garden. The total cost was between 280,000 and 300,000 euros,” recalls Delphine.
To finance the project, the couple took out a loan of 180,000 euros at 2.5% for 20 years. However, after four years, they decided to refinance the loan. “We approached a broker and managed to lower the rate to 1% by changing banks,” says Delphine. This reduced their monthly payment by 150 euros.
🏙️ The decision to sell the house
In 2023, after 10 years, the family decided to move to the city center within the same region. They honestly informed the bank about selling the house and their desire to keep the current loan for the new purchase. Initially, the bank had no objections, but a week later, they were warned that this was not allowed.
💰 The trick to keeping the favorable loan
The couple ignored the bank’s warning and did not read the contract terms closely. “They offered us a 4% rate on the remaining 100,000 euros, which seemed too expensive,” explains Delphine.
The couple sold the house for 440,000 euros, making a substantial profit. To avoid drawing the bank’s attention, they did not change their mailing address and stopped issuing checks. They transferred the proceeds from the sale to another bank.
🏢 Buying an apartment without a loan
In the same year, they bought a 100 m² apartment with three bedrooms for 350,000 euros. “We won among other buyers because our offer was not conditional on a mortgage. We paid everything in cash,” says Delphine.
⚖️ Risks and possible consequences
Although the couple is pleased with their trick, their actions are illegal. “The agreement between the borrower and the bank governs the loan obligations,” reminds the French Banking Federation. If the bank discovers the violation, it may demand early repayment of the loan.
By law, the sale of real estate purchased with a loan requires its full repayment, unless the contract contains a clause allowing the transfer of the loan to a new property. However, even in this case, the bank must give its consent.
Currently, there are no clear norms or court rulings on this matter, but experts warn that such schemes could lead to serious problems.
📞 Contact me if you wish to buy or sell property in France.