The first-time PTZ
Do you want to become the owner of your main residence? Note that it is now possible to benefit from a zero rate loan (PTZ) to buy a home. However, certain conditions must be respected, in particular being a first-time buyer (this is why we speak of a first-time PTZ). A look back at the flagship product of the current French real estate market.
What is a first-time PTZ?
The first-time PTZ is first of all a regulated loan, that is to say a real estate loan supervised by the public authorities, making it possible to acquire or carry out work at advantageous conditions, provided certain criteria are met.
The first-time PTZ is also a “free” loan, a free cash advance, because the amount repaid corresponds exactly to the amount loaned. It is therefore a zero rate loan, without interest since the latter are supported by the State for the benefit of the lending institution. In addition, no administrative or expert fees can be charged to you in the context of a first-time PTZ.
The first-time PTZ is only a complementary loan because it does not finance your entire project. It is often necessary to supplement it via other types of credit, or simply by a personal contribution.
Finally, the first-time PTZ is a conditional loan, that is to say it is only open for the benefit of certain people who meet several criteria.
What are the criteria for benefiting from a first-time PTZ?
As its name suggests, the first-time PTZ is reserved for first-time buyers who are natural persons. In particular, you must not have owned your main residence during the last two years and not be a legal person (a civil company cannot therefore benefit from it). However, there are exceptions since this condition is not required if the borrower, or one of the occupants of the dwelling:
- Suffers from a serious disability (holder of a disability card and unable to work, or beneficiary of a disability allowance);
- Or lives in housing that is definitely uninhabitable following a natural or technological disaster (the request must then be made within 2 years of the publication of the decree noting the loss).
But this condition is not the only one since there are also imperatives relating to resources. In fact, the granting of the first-time PTZ is reserved for those whose resources do not exceed a certain ceiling. The scale is posted on the administration's website but overall it remains open to households with modest and intermediate resources. To determine the ceiling, the law takes into account:
- The number of people intended to occupy the accommodation: The marital situation is irrelevant but an unborn child is already considered to be part of the household.
- And the housing area: A decree, which entered into force on October 1, 2014, divided the French territory into three zones (A, B and C). This zoning takes into account the tension of the local real estate market, that is to say the balance between supply and demand in terms of housing (in terms of volume and price).
Let us make a concrete application: In 2016, a couple wishing to benefit from the PTZ first-time buyer, and to buy housing in the Paris region (“tense” zone A), must have maximum resources of € 51,800; if he has three children, the ceiling reaches 85,100 €. On the other hand, if the property is located in a rural area, the couple's resources should not exceed € 33,600, € 55,200 if they have three children.
The resources to be taken into account correspond to the higher of the following two sums: the reference tax income of all occupants of the dwelling for year n-2 (that is to say, for a first-time PTZ request made in 2016, revenues for 2014) or the total cost of the operation divided by 9.
Note: Household income will also count to determine the loan repayment period and any deferred repayment.
Finally, not all accommodation is payable to the PTZ first-time buyer. Indeed, such a loan can only finance:
- The construction of housing and the acquisition of the land intended to receive the building;
- Or the purchase of a completed new home;
- Or the development for housing use of premises not intended for accreditation, or of a building for its first occupation requiring the performance of work contributing to the production / delivery of a new building (eg: rehabilitation of a former industrial workshop);
- Or the purchase of an existing home, on the condition of carrying out major development work;
- Or the purchase of HLM housing, under certain conditions.
As such, a first-time PTZ can only be granted within the framework of the principal residence of the borrower. By this is meant the accommodation occupied for at least eight months a year and which constitutes the center of the borrower's personal, professional and family interests. This is why he will be asked to actually occupy the accommodation in the year following the purchase of the accommodation or that of the declaration of completion of the work.
What are the amounts and terms of reimbursement for a first-time PTZ?
The first-time PTZ is determined by a percentage of the actual total cost of the operation. This cost corresponds to the purchase price, the cost of construction, and even also the cost of the land and the cost of the work to be carried out. Please note: Notarial deed fees and registration fees are not included.
However, the result obtained must not exceed a certain ceiling which is also determined by the number of occupants of the accommodation and the area of establishment - the applicable scale is also found on the site of the public authorities. Also, the maximum amount of the PTZ cannot exceed 40% of the cost of the operation and it can reach up to 138,000 €.
Let us take our previous example: A couple, without children, wishes to acquire in the Paris region and for that requires a first-time PTZ. The maximum PTZ amount is 40%. Since there will only be two people who will occupy the accommodation, which is located in the "tight" zone A, the maximum cost of the operation is 210,000 €.
- If the actual total cost of the operation is € 100,000, the maximum amount granted will be € 100,000 X 40% = € 40,000.
- If the actual total cost of the operation amounts to € 250,000, it exceeds the authorized ceiling. Therefore, it is the amount of this ceiling that will be taken into account and the maximum amount granted will be 210,000 X 40% = 84,000 €.
As for the repayment period, it also takes into account the sum of the income of the occupants of the accommodation, the composition of the household and the geographical zoning in which the accommodation is located. Basically, the more modest the income, the longer the first-time PTZ will be.
This period is between 20 and 25 years and includes a deferral period of 5, 10 or 15 years (during which no monthly payment is paid), i.e. a repayment period which varies between 10 and 15 years.
Several simulators are online on different sites (in particular that of the ministry in charge of housing), which allows you to already assess, and in complete transparency, your situation if you are interested in a first-time PTZ.
Who to go to see to obtain a first-time PTZ?
You have to go directly to a credit institution to obtain a first-time PTZ offer. The latter must have signed an agreement with the State (the majority of banks are concerned).
Therefore, a double-freedom exists:
- First of all yours: You can choose the organization of your choice.
- But also, that of the lender: As with any type of loan, an establishment always benefits from a freedom of appreciation. The first-time PTZ is not lacking in this principle. He will therefore be able to freely check your solvency, ask you for various guarantees, or even require you to take out death-validity insurance to protect himself. This freedom extends to a freedom of refusal since an organization is never obliged to grant you a loan.
What obligations do I commit to when I contract a first-time PTZ?
As we have seen previously, this type of loan is reserved for the purchase of a principal residence. Therefore, the State has closed the possibilities of renting and reselling the housing concerned by the first-time PTZ.
Regarding the rental of the property, it is in principle impossible because the accommodation must be used as a main residence. The finance law for 2016 nonetheless modified this period of obligation to occupy the housing: it went from the end of the reimbursement of the first-time PTZ (i.e. sometimes 25 years) to 6 years. It is therefore only possible to rent the accommodation after 6 years. But there are exceptions in the event of exceptional events (examples: professional mobility, unemployment situation for more than one year, death, divorce, etc.).
Regarding the possibilities of resale, it is always possible to reimburse the remaining balance of the first-time PTZ. If you want to buy a new home, you will not be able to benefit from a new first-time PTZ since you will have owned your main home for the past two years. Then there is the option of loan transfer: you can request it from the institution that granted it to you. In this case, the repayments continue and the funds can be used to purchase the new primary residence. Note, however, that such an operation is subject to the agreement of the organization, which can therefore freely refuse it.
The first-time PTZ allows you to benefit from more than favorable conditions to carry out your real estate project. In return, several conditions must be met. Like any loan, it remains an important commitment, which should not be taken lightly, especially since it comes with some obligations.