Lifetime mortgage (French reverse mortgage)
A loan secured on the home and repaid only when the borrower dies or the property is sold: the lender carries longevity risk compounded by property risk.
A French lifetime mortgage lets an older homeowner draw an income or a lump sum from the home without selling it or moving out. Principal and interest are not repaid during the borrower's life: they accumulate, and the debt falls due only at death or when the property is sold, out of the sale price. The debt cannot exceed the home's value, so the heirs never owe more than the property. The lender therefore carries two correlated risks: that the borrower lives long enough for compound interest to exceed the home's value, and that the value falls. Unlike a viager sale, the owner remains the owner; the product meets the same need for liquidity among retirees who are rich in property and poor in income.
Ordinance No. 2006-346 of March 23, 2006 introduced the lifetime mortgage into French law, now in Articles L. 315-1 and following of the Consumer Code. According to the government, only one lender ever offered it, Crédit Foncier, averaging fewer than 1,000 loans a year from 2007; it stopped offering it in February 2019, and the French notaries' congress noted in 2023 that no bank offered it any longer.
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