Thermal leaks affect millions of homes in France. Highly energy-intensive, the houses or apartments concerned significantly increase the energy bill for occupants. For the planet, it's a real scourge generating a large amount of greenhouse gases. To combat this phenomenon and improve the energy performance of the home, it is necessary to carry out energy renovation work. However, this is an expensive operation that is not within everyone's reach. That's why the French government has put in place a number of aid schemes, such as the Monexpert Energy Grant, MaprimeRénov', the "energy-saving boost" grants, the Zero Interest Eco-loan, etc. To complement these, the French government recently decided to launch a new scheme called the "renovation advance loan". The latest on this in this article.
What is the Renovation Advance Loan?
The renovation advance loan is a new boost dedicated to financing energy efficiency works, in parallel with the France Renov and Mon Accompagnateur Renov programs. It helps owners of thermal leaks finance the energy renovation works of their residence. It targets houses or apartments classified as "F" or "G" on the Energy Performance Diagnosis (EPD).
Launched on January 1, 2022, this mortgage loan was created thanks to the recommendations of the director of the Banque des Territoires, Olivier Sichel. As a reminder, the French government asked him to put forward proposals to accelerate the energy transition. He then suggested deploying an easily accessible credit offer, called the "renovation advance loan". The principle is to highlight and develop on a large scale the renovation advance loan that did not achieve the expected result.
This scheme is inspired by the renovation advance loan. Its aim is to help low-income households and the elderly, often excluded from conventional loans, to repay the remainder of the project's costs. Indeed, lending institutions are very demanding when evaluating credit applications. They meticulously check the repayment capacity of borrowers to protect themselves against the risk of defaults.
This offer is distributed by two banks, namely Crédit Mutuel and La Banque Postale. Other banking institutions are expected to offer it in the coming months.
How Does This Scheme Work?
The renovation advance loan is an interest-only loan with a fixed rate of 2%. The repayment of the capital is made when the renovated property is sold or when it is transmitted through inheritance. The interest can be paid throughout the loan term for borrowers under 60. For those over 60, they can be settled in full.
The renovation advance loan does not require borrower insurance and does not involve any application fees. No fees apply in case of early repayment. However, this credit is covered by a mortgage taken out on the property. The latter is associated with the public guarantee provided by the state. Indeed, the FGRE (Energy Renovation Guarantee Fund) covers up to 75% of any potential losses. Such a measure should reassure banks that have so far refused to offer the loan.
Who Is Eligible for This Scheme?
The renovation advance loan is not for everyone. It is primarily aimed at owners of homes classified as "thermal leaks". Moreover, it is mainly intended for low-income or precarious households. It also concerns the borrower declared insolvent due to their age. These profiles often encounter difficulty accessing conventional bank loans.
The conditions to benefit from this offer are generally the same as those of the former renovation advance loan. Among other things, you must own the property mortgaged. In addition, it must be used exclusively for housing, i.e., occupied as the main residence. Furthermore, your resources must meet a certain ceiling set by the National Housing Agency (ANAH). It depends notably on the location of the residence and the number of people in your household. The amount taken into account is your tax reference income displayed at the top left on the first page of the tax notice.
Here are the income ceilings applicable as of January 1, 2022 :
It should be noted that income ceilings are revised annually on January 1st.
What Works Are Eligible for the Renovation Advance Loan?
The renovation advance loan finances only energy renovation works. The funded project must notably allow improvements in energy performance. Among others, the following are concerned :
- thermal insulation of roofs ;
- insulation of the surface of walls facing the exterior ;
- insulation of low floors ;
- replacement of single-glazed windows with double-glazed ones ;
- replacement of exterior doors ;
- regulation works, installation, or replacement of heating equipment, associated, where applicable, with natural hot water production systems ;
- installation of heating systems using renewable energy sources ;
- rehabilitation of non-collective sanitation systems with more energy-efficient devices.
All these works must be entrusted to qualified RGE(Recognized Guarantors of the Environment) professionals. They are also the ones who provide all the materials.
What Is the Amount of the Renovation Advance Loan?
The amount of the renovation advance loan depends mainly on the value of your property and the banking institution you are applying to. An expert must obviously estimate the housing based on the real estate market. Taking into account this diagnosis, banking institutions assess your borrowing capacity based on your age and gender. These two factors are particularly important in calculating the interest capitalization period (the life expectancy of females being higher than that of males).
At La Banque Postale, for example, the minimum amount granted is €3,500, while the maximum depends on the age of the applicant :
- up to 70% of the value of the property before work for borrowers under 60 years old ;
- between 25 to 45% of the value of the property before work for those aged over 60.
At Crédit Mutuel bank, the loan offer is a minimum of €5,000 and a maximum of €30,000.
Is It Possible to Combine the Renovation Advance Loan with Other Schemes ?
The renovation advance loan complements the energy transition grant MaPrimeRénov'. These two aids are therefore cumulative. Initially, you must use the amount you can benefit from with MaPrimeRénov'. Then, it is possible to obtain the out-of-pocket expenses, i.e., the amount you must finance yourself after the aids. This amount is the subject of the renovation advance loan boost.
It is also combinable with other schemes, such as:
- the eco-PTZ,
- aid from the National Housing Agency,
- VAT (Value Added Tax) at a reduced rate of 5.5%,
- bonuses from the Energy Saving Certificates (CEE) scheme.
In concrete terms, the renovation advance loan is a financing solution that complements other subsidies. This is why it is often said that this scheme covers the out-of-pocket expenses.
Where to Apply for a Renovation Advance Loan?
To apply for a renovation advance loan, you must contact directly one of the banks that offer it (Banque Postale or Crédit Mutuel, for the moment).
As with a traditional loan, the bank will provide you with a loan offer. This offer includes all the information regarding the loan, namely :
- the identity of the borrower and the lender,
- the designation of the mortgaged property and its value,
- the total cost of the credit,
- the Annual Percentage Rate (APR),
- all the terms of disbursement of the borrowed amount.
The signing of this contract takes place before a notary who is also tasked with verifying the valuation of the property. It should be noted that the fees of this legal professional are borne by the borrower.
In conclusion, the renovation advance loan is assistance aimed at households with low incomes. It also gives seniors the opportunity to access a loan to finance renovation works to improve comfort in their homes. The repayment of the capital of this mortgage loan is made upon resale or transmission of the property in inheritance.