Everything you need to know about interest-free loans - 15 July 2008

An interest-free loan (often abbreviated to PTZ in French) is a subsidised loan where the interest on the capital borrowed is paid by the State. It complements your main bank property loan and is often accepted by banks as a deposit.

To qualify, you must meet the following conditions:

• you must be a first-time buyer buying your principle residence (or have not owned your own home for at least two years and be buying your principle residence)
• your income must fall below a certain maximum level, which varies depending on the location of the property and the number of occupants
• you must be taking out a principal loan: an interest-free loan cannot be the sole source of finance, nor the largest

The amount of the loan varies depending on the number of people making up the tax household and the region in which the building is located. Loans are higher for new properties than old.

The maximum loan amount is equivalent to 20% of the purchase price up to a maximum of 50% of your total borrowings for this property.

In certain cities and départements (like Paris, Toulouse, Nantes and Hauts-de-Seine), the interest-free loan amount is higher than in other places. Obtaining this higher loan is again subject to a maximum level of income. You will also have to provide evidence that you have lived in the city concerned for a certain period of time (usually 1-3 years). For more information, you should contact your Conseil Général.

Interest-free loans are repaid in equal monthly instalments over a period of between 6 and 22 years, depending on your income. The higher your income, the shorter the loan period.

You can find out more from any lending institution that has signed the appropriate agreement with the State. The best thing to do is to ask your bank.