A private individual can lend money for a home purchase, but in France the deal needs a solid written agreement, ideally a notarial deed with a mortgage, must respect the usury rate and must be declared for tax above 5,000 euros.
What a property loan from a private individual covers
It is often a parent or relative financing a flat, a house or the notary fees. The French Civil Code governs this loan, without the Consumer Code protections reserved for credit granted by professional lenders.
The banking monopoly limits habitual lenders
The Monetary and Financial Code reserves lending carried out on a habitual basis to credit institutions. An individual may lend once to someone close, but a person offering property loans to strangers online is engaged in a suspicious and often fraudulent activity.
Why a notarial deed matters for a large sum
For a large amount, an authentic deed signed before a notary gives a certain date, strong evidential value and direct enforceability. If payments stop, the lender can seize assets without first going to court. See our page on the notary and private loans.
Mortgage or lien: securing repayment
Since the 2022 reform of security interests, the former lender's lien has become a special statutory mortgage. A private lender can also register a contractual mortgage with the land registry service, which requires a notarial deed and involves fees.
Interest rates and the usury ceiling
The parties freely choose a rate, or no interest at all, but any agreed rate must be set out in writing under Article 1907 of the Civil Code. It cannot exceed the usury rate published quarterly by the Banque de France for that loan category.
Tax declaration and the risk of a disguised gift
A loan above 5,000 euros must be declared on form 2062 (the French tax form for loans), and interest received is taxable. A family loan never repaid may be reclassified as a gift; the rules are summarised on our page on private loan taxation.
Combining a bank mortgage with a family loan
Many buyers pair a bank loan with a family loan used as a deposit. The bank then examines the debt ratio, capped by the High Council for Financial Stability (HCSF), and may count repayments owed to the parent. Disclose the arrangement clearly.
Property crowdfunding is not a loan to buyers
Property crowdfunding platforms collect savings from individuals to lend to developers or property dealers, not to households buying their own home. They must hold the European crowdfunding service provider authorisation issued by the AMF, the French financial markets regulator.
The very low-rate private mortgage scam
Adverts on Facebook or classified sites promise property financing at 2 or 3 percent with no conditions. After a fake contract, the victim is asked to pay application, insurance or notary fees before a transfer that never arrives.
The fake notary, a classic warning sign
Scammers imitate notary offices, use the names of real notaries and demand an advance to release the funds. A genuine notary never asks for money upfront to release a loan; check the official directory and read about the fake notary scam.
Drafting the schedule and planning for incidents
The agreement should state the amount, term, rate, each payment date, early repayment terms and what happens if the borrower dies or sells the property. A local ADIL housing information office can help check that the financing plan is balanced.
Who to consult before signing
The notary remains the key contact for the deed and the security. ANIL and the local ADIL offices give free advice on housing finance, and a lawyer can review complex clauses. This site offers no loans and does not replace such advice.
Steps to finance a home through a relative
- Assess the exact need: property price, notary fees, renovation work and the share covered by the bank or by your own savings.
- Agree with the lender on the amount, term, any rate below the usury ceiling and the security wanted on the property.
- Have a notarial loan deed drawn up with a registered mortgage, or at least an IOU complying with Article 1376 of the Civil Code.
- Pay the money by traceable bank transfer, ideally into the account of the notary office handling the sale.
- Declare the agreement on form 2062 if the loan exceeds 5,000 euros, then declare the interest received each year.
- Track repayments through a standing order and keep the statements for the full term of the loan and beyond.
Costs to budget for a private home loan
| Item | Order of magnitude | Remark |
|---|---|---|
| Interest between individuals | Freely set, 0 % possible | Ceiling: quarterly Banque de France usury rate |
| Notary fees for the loan deed | Regulated scale, varies with the amount | Indicative, ask the notary office for a quote |
| Mortgage registration | Tax and fees proportional to the secured capital | Indicative, ask the notary to calculate it |
| Tax on interest received | Flat-rate levy or progressive scale, by choice | Check the current rate on the official tax website |
| Fees demanded by a fake lender | Several hundred to several thousand euros | Always lost, never pay in advance |
File to assemble before the deed
- Identity documents of lender and borrower
- Preliminary sale agreement for the property
- Borrower's proof of income and tax assessment notice
- Notarial loan deed or signed IOU
- Dated repayment schedule
- Bank details of both parties
- Completed form 2062
- Proof of the funds transfer
Pitfalls of peer-to-peer mortgage lending
- Paying application, insurance or release fees to a stranger promising a home loan: this is the classic pattern of the advance-fee scam.
- Handing over family money in cash with no written record or transfer, making the loan impossible to prove and exposing it to reclassification as a gift.
- Trusting a so-called notary contacted through a messaging app or social network without checking the office in the directory of French notaries.
- Failing to take security over the property, leaving the lender unprotected if the borrower sells the home or goes bankrupt.
- Hiding a repayable family loan from the bank, which distorts the debt calculation and can lead to a refusal or a challenge to the mortgage.
Questions about home loans between individuals
Can a parent fund the purchase of my flat on their own?
Yes, nothing prevents a one-off loan. You do need a written agreement stating amount, term and rate, ideally notarised with security, a form 2062 declaration above 5,000 euros and genuine repayments to avoid reclassification as a gift.
Does the bank treat a family loan as a deposit?
That depends on the bank. A repayable loan increases your outgoings and may be counted in the debt ratio capped at 35 % by the HCSF. A gift, by contrast, is a genuine deposit. Explain the situation clearly to your adviser.
Is a notarial deed essential to lend against a home?
Not for the loan itself, since a private IOU is valid. However, any mortgage over the property requires a notarial deed, and an authentic deed offers valuable direct enforceability for large sums.
How can I spot a fake property lender online?
Abnormally low rates, no credit assessment, contact via WhatsApp or Facebook, fees requested before payment, fake documents bearing a bank or notary letterhead. Any one of these signs is enough to stop all contact and report the advert.