Buyers who do not have sufficient financial capacity to borrow are looking for alternative solutions. One of them can be the subscription of the mortgage by a person other than the purchaser. Is it possible to take out a mortgage for a third party such as a child, brother or sister? Let’s take stock in our article.

What are the conditions required by banks for taking out a mortgage?

To obtain a mortgage with, if possible, an advantageous interest rate, the banks first of all require exemplary financial capacity. Solvency must be correlated with a stable professional situation over the long term and associated with regular income. The debt ratio must be less than 35% according to the recommendations of the HCSF to leave an acceptable living allowance. The other requirements are:

Gathering all these conditions is not within the reach of all buyers. They then turn to a third party for financial assistance in various forms such as a loan.

Can a third party take out a mortgage for a family member (child, brother, sister, etc.)?

Taking out a home loan for a third party, whether a brother, sister or child, seems legally and fiscally difficult. Indeed, to obtain a conventional mortgage, you must in principle be the owner of the property purchased. Leaving full ownership to a third party is like a disguised donation. If there is a loan, it must be stipulated at the notary as a cash donation spread over the loan repayment period. It is still necessary that a bank follows and accepts the credit. The conditions for the borrower will of course be the same as those mentioned above. Other solutions exist to financially help a member of his family: the family loan, the SCI, the donation or the deposit.

Grant a family loan

When taking out a home loan for a family member is unthinkable, the zero-rate family loan solution is a good idea. If it does not cover the entire loan, it is a significant contribution and allows access to conventional mortgage for the rest of the amount. A contract, recorded or not with a notary, stipulates the amount and the terms of reimbursement. Beyond €1,500, this loan must be declared to taxes. Reimbursed in principle each month, this loan can increase the debt ratio.

Navigating the possibility of securing a mortgage for a family member requires careful consideration and efficient processes. With the assistance of mortgage processing experts, intricate documentation and legal requirements are managed effectively, ensuring a smooth transaction tailored to the unique needs and circumstances of all parties involved.

Create an SCI

The other solution is the creation of an SCI or civil real estate company with one or more members of his family. In this case, it is the SCI which contracts the mortgage. The property can then be inhabited free of charge or against payment by one of the partners. This possibility must be mentioned in the statutes. When the borrower wishes to obtain full ownership of the property, he can redeem the shares of each of the signatory members.

Make a donation

The manual donation is also another possibility when taking out a mortgage for a third party is not possible. By respecting the tax rules, the donation of a parent to a child is very easy. Each parent can give their child up to €100,000 every 15 years. This amount is exempt from gift tax. It finances a good part of the capital necessary for the acquisition of a home. The conditions of access to the mortgage are easier with this substantial contribution. A tax-exempt donation with a more distant relationship is also possible within the limit of €31,865 every 15 years. The donor must be under 80 and the beneficiary must be of legal age.

Stand surety

Finally, when taking out a mortgage for a third party is not possible, there is still the possibility of being a joint surety or guarantor. Family member or friend, the guarantor undertakes to pay the monthly installments of the credit if the borrower can no longer honor them. When setting up the mortgage, the guarantor must justify his financial capacity over the long term. A written deed is signed between the lender and the guarantor.

To conclude, unless you buy a property jointly, it seems difficult to take out a mortgage for a third party without the latter also being a borrower. It is however possible in the family or friendly sphere to be a co-borrower of the mortgage without being a co-purchaser. At the end of the credit, full ownership will be granted to the buyer appearing on the deed of sale authenticated at the notary. To be co-borrower non-purchaser, the bank requires the same guarantees as with the borrower-purchaser. Mortgage insurance for each co-borrower must also be taken out with the same insurer or with a different insurer. Since the Lagarde law of 2010, the borrower can freely choose his mortgage loan insurance thanks to the delegation.