How does this guarantee work?
When taking out a real estate loan, banks in the vast majority of cases (around 95%) require a guarantee to the borrower. In the past it took the form of a mortgage. For more than 45 years, it can act as a guarantee provided by Crédit Logement. An alternative to a mortgage guarantees the banks repayment of the real estate loan in case of default by the borrower.
Crédit Logement acts neutrally and benevolently and aims to secure the financing of real estate loans, whether for the borrower or for the bank. And finally, the company operates exclusively in the residential real estate sector (main, secondary or rental housing).
What are the benefits for the borrower?
First, the guarantee is less formal, based on a private deed. So the process is faster, easier and cheaper than a mortgage.
Then the guarantee is a guarantee that we call active, because it accompanies the borrower throughout the life cycle of the real estate loan. When a borrower has difficulties with repayment, Crédit Logement seeks an amicable solution with him and his bank. Unlike a mortgage, which is resolved by eviction and pure and simple expropriation of the property, Crédit Logement engages in dialogue and does everything to find a solution. In 50% of cases, we find a solution to get the loan back (planning, selling e.g. another property, etc.). It is often easier for us than the banks to have a neutral exchange with the borrower because we have no history with them. Our neutrality and benevolence partly explain our success.
Another benefit is that if the borrower resells their property before the loan expires, there are no release fees. Crédit Logement really supports the borrower throughout the duration of his loan and helps him overcome events such as a change in personal situation, partial early repayment, resale of the property, financial difficulties, etc., all at no additional cost.
What are the benefits for the bank?
Before the bank accepts the loan, we ensure the borrower’s ability to pay. Then we guarantee the entire loan, and in the event of default by the borrower, we pay immediately. Finally, the bank got back on its feet without delay. They don’t have to deal with reimbursement issues because they are outsourced. We will take care of handling the borrower’s problems on our side.
The bank is reassured and the borrower is accompanied, if necessary, when events occur that frustrate his repayment.
What sets you apart from your competitors?
Our operation is uniform. We are financed by a mutual guarantee fund to which each borrower pays a contribution: it is a system of risk pooling between borrowers. When the loan matures, we return part of the initial payment to the borrower, which is the only one we offer. Currently, this restitution amounts to 76% of the borrower’s contribution.
In addition, while our competitors are subsidiaries of banks, we work with all local banks. We thus enable banks to outsource risks. More than 200 partner banks can offer the Crédit Logement guarantee throughout France.
Since 1975, more than 10 million borrowers have been able to guarantee their credit and realize their real estate project without a mortgage. Today, we guarantee every third real estate loan. This means that we have a very broad base of numbers about the reality of the market.
Residential market financing observatory
We have a really large database of real-time market numbers. Our numbers are an accurate reflection of what is in practice. They can represent a source of relevant information for the various players in the residential real estate market in France. That is why Crédit Logement holds a press conference on these data every quarter. And every month we publish an observatory on the financing of residential markets in France, including real-time statistics: in particular, interest rates and loan duration. In September 2023, interest rates were 3.98% compared to 3.80% in August, so they continue to rise, while loan durations remain stable (just over 20 years).