Understanding the process
Regulation pertaining to housing loans was published in the Journal Officiel de Monaco on 8 August 1997.
Housing loans are intended either to provide for the maintenance of residential buildings or to improve the living conditions in the building. It is mandatory that these housing loans be used for essential major repair works, heavy maintenance or considerable improvement of living conditions.
In order to receive a housing loan, you must fulfil the following conditions:
- You must be of Monegasque nationality
- You must own property which is primarily residential and is located in Monaco
- You must, in the case of a jointly owned building, hold at least half of the rights to the building or the jointly owned part of the buillding
- You must prove the reasons for which you cannot finance the works personally
You must make sure, for the entire duration of the loan, that the building or the part of the building that you own is not used as a commercial or professional premises.
The loan amount may not exceed 45% of the market value of the property.
The sums loaned may not be higher than the anticipated cost of the works.
The amount is limited in as much as the monthly repayment may not exceed a quarter of the household income.
The rate of interest is 5% per annum.
The maximum loan duration is 15 years.
The loan is repaid with steady monthly payments which are defined in an amortisation table. This amortisation table is established by the Department of Budget and Treasury.
You must provide:
- A written application which is addressed to H.E.Mr the Minister of State but submitted to the Department of Budget and Treasury
- A certificate of nationality
- A mortgage status report issued by the registrar of mortgages
- The descriptions of work and estimates for the planned works
- An appraisal of the market value of the building for loans which equal or are higher than €15, 300
- A deed of ownership
- Compensation of the percentage owners for a jointly owned building
- Proof of all household income and expenses for the last 12 months
- Death and disability insurance and/or a guarantor obligation
You should submit the complete application to the Department of Budget and Treasury.
Loans whose capital amount is equal to or higher than €15, 300 are recorded by way of a notarial deed which is established before any payments are made: the deed specifies, most imporantly, the collateral such as first (or other agreed rank) rank mortgage registration and death and disability insurance, all of which are intended to guarantee repayment. The State Property Authority makes contact with the notary public in order to prepare the deed of loan. You will be responsible for the expenses associated with the notarial deed.
Loans whose capital amount is below €15, 300 are subject to an administrative act which is received by the State Property Authority before any payments are made: the act specifies, most importantly, the guarantees such as personal surety, bank security and a security deposit, all of which are required to ensure repayment.
Counting from the date on which the deed of loan is executed and after the agreed rank mortgage registration formalities have been completed, an account is opened with the Public Treasury in the name of the recipient of the loan.
This account is credited with the agreed loan amount and debited for all payments made to suppliers.
The loan amount can only be paid after the Authority has verified its records (verification of invoices received as the works progress with the initial application).
However, you may request the direct payment of a proportion of the loan which may not exceed 30%.
To receive this direct payment, you must address a request to the State Property Authority, accompanied by supporting evidence and, most importantly, a certificate from the Department of Budget and Treasury attesting that the works which have already been completed reach or exceed the amount of the requested proportion. If the State Property Authority does not receive this certificate, no payment will be made.
Each month, you must pay the sum provided for in the amortisation table.
If you wish to make an advance repayment of the loan, you must advise the State Property Authority of your intention at least three months before the expected date of repayment using a registered letter with acknowledgement of receipt.
The outstanding balance becomes immediately payable:
- In the event of voluntary sale, forced sale, disposal, contribution, donation or transfer to a third party of the use or the usufruct of the properties for which the loan was provided or those properties which were provided as a guarantee
- In the event of the sale of the joint property rights, resulting in more than a 50% reduction of your stake in the property
- In the event of the use of some or all of the sums loaned for purposes other than those provided for in the contract
- if you default on the capital and interest payment schedule for three months. A single order granting one month to repay the loan is then made by registered letter with request for acknowledgement of receipt
- In the event of the non payment of death and disability and fire insurance premiums
- In the event that you subsequently enter into a contract for another loan before gaining the approval of the State Property Authority