A Lombard loan (lombard credit), a loan contracted on liquidities, is an effective means of financing projects.
These types of loans first appeared in the Italian region of Lombardy in the Middle Ages, reflecting the type of borrowing with which merchants were engaged.
Take advantage of the private banking system
Today in France, Lombard loans can be guaranteed by Assurance Vie and policyholders can borrow up to 100% of the amount invested.
Using a private bank, Daniel explains that these loans are interest-only – with a fixed interest rate of 1.5% depending on when the loan is taken out – and renewable every three years.
Applicants do not need to worry about adding loan insurance (insurance for death and disability), which is generally standard practice when borrowing funds in the French banking system, as it is not necessary for this type of loan.
French Lombard loans more accessible
“In France, a private bank offers an accessible Lombard loan solution with an investment of €100,000,” explains Daniel.
“This offers great opportunities for clients, because, for example, in Luxembourg, a Lombard loan starts at 1 million euros.
“The French version offers a much more accessible solution for everyone.
Some aspects of the borrowing process need to be handled with care, so it is important to seek the advice of a specialist before proceeding.
Daniel explains: “The loan must be justified because it is forbidden to borrow to invest in France.
“However, it can be used for many reasons, such as renovating a house.
“However, the conditions for accessing the loan are generally simple and once you have life insurance, you can borrow at any time.”
The level of investment risk is a factor
One hurdle applicants may need to overcome is that the higher the assumed risk of an asset invested in Life Insurance, the less you can borrow.
“However, there is basically room for flexibility,” says Daniel.
“Each asset class allows you to borrow a certain percentage.
“For example, if you’re invested in the popular ‘euro fund’, you can borrow 100% of what’s invested.”
Daniel suggests that those with mid-term or future plans consider this Life Assurance/Lombard loan combination.
“It’s a simple process and the Assurance Vie product will grow during the loan period,” he says.
“Also, there is absolutely no obligation to use the facility once Life Assurance has been set up, it is right there if needed. ”
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