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The Housing Savings Loan with an ELP (2014).

If you have a home ownership project, several solutions are available to you for financing:

If you have a home ownership project, several solutions are available to you for financing:

  • Personal contribution.
  • Classic bank real estate loan.
  • But also the home savings loan.

Regarding the bank mortgage, we advise you to consult the articles that we have written on the subject.

First of all, if you don’t have an open home savings plan, you don’t have to think about it. Access to this loan is only possible for holders of an ELP opened for more than four years.

How the home savings plan works :

How the home savings plan works :

The operation of the ELP is quite specific and breaks down into two periods :

1st period : This is a savings phase, you must first open a Housing Savings Plan with your bank.

  • A minimum deposit amount at opening is compulsory, it is 225 USD.
  • Then each year you will have to deposit a minimum of 540 USD (i.e. in the case of a monthly transfer, 45 USD per month).
  • CONSTRAINT : The sums paid into the account are blocked for the entire duration of the ELP (i.e. at least 4 years).
  • COUNTERPARTY : The state pays a premium to the account each year, this state premium is proportional to the interest earned, the state premium is capped at 1,525 USD per year.
  • PEL PERFORMANCE : The PEL ‘s remuneration rate is currently 2.5%, however it is subject to social security contributions, CSG and RDS. (the rate drops to 2.10% after direct debit). The state premium is 1%.

2nd period : From the 4th year, you can obtain a Housing Savings Loan.

  • SPECIAL FEATURE : The rate of this loan does not depend on the financial markets at the time you take it out. Indeed, it was defined at the time of the subscription of the ELP.
  • The amount of this loan is calculated based on the interest earned on the PEL (excluding state premium)
  • The calculation is as follows : The amount of interest acquired is multiplied by 2.5. The amount obtained represents the amount of interest on the loan that will be granted to you. The consequence of this method of calculation is that the longer the duration of repayment of the loan, the less the amount of the loan will be high.

CONSEQUENCE :

  1. If at the time you concretize your real estate project, the rates of real estate loans are higher than that of your Home Savings Loan, you are doubly getting a good deal. Indeed, you benefit from the state premium and get an unbeatable rate loan.
  2. By cons if the mortgage rates are lower, it would be silly to borrow at the rate defined in the ELP! You can nevertheless integrate the capital and interest acquired on the ELP into your financing plan.

Who can open an ELP, and what are the conditions ?

Who can open an ELP, and what are the conditions ?

  • Any adult can open an ELP.
  • Only one ELP per person.
  • Parents can open an ELP on behalf of their minor child.

TIPS:

  • The minimum payment when subscribing is 225 USD, however, it is wise to pay a large sum from the start. In this way, your ELP will generate more cumulative interest and the state premium will also be higher.
  • The state premium is calculated for the year, and is only paid for full years. This is why we advise you to close it just after an anniversary date!

Attention: The PEL is as we explained above a blocked account, the consequence is that if you make early withdrawals, this leads to the breach of the contract. If this rupture occurs before the anniversary of the 2 years of the contract, you will lose the benefit of the state premium and the remuneration of 2.5%, will be revised to 1.25%.

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