Leaving work in a few months: how to get a French loan application accepted

Someone who will retire very soon can borrow without difficulty in France. The key point is that the bank measures your repayment capacity on the pension you are going to receive, not on your current salary, as soon as the leaving date falls within the life of the loan. Your file therefore rests on one central document, a figured pension estimate, and on well-chosen timing.

Between the day you fix your leaving date and the day your pension is actually paid, you are in a grey zone: still an employee on paper, already a pensioner in the lender's reasoning. Yet this is exactly when many projects come up, from changing the car and adapting or selling the house to helping a child or buying somewhere smaller. Prepared properly, the transition is no obstacle. If part of your career was spent in the UK, the US or elsewhere, gathering proof of those pensions is the one extra task.

Which income will the lender look at?

For credit that ends before you leave work, your salary is enough. For any loan that runs beyond that date, the lender takes the lower income, meaning the estimated pension: the basic state pension, the complementary scheme (Agirc-Arrco for most private-sector employees) and any supplementary retirement plan. It checks that the instalment plus your other commitments stays below 35% of that amount, in line with the HCSF standard for mortgages, and near 33% for consumer credit.

Be careful about which figure you quote. Pension estimates are often shown gross. After CSG, CRDS and the CASA solidarity levy, the French social charges deducted from pensions, the net amount can be several points lower depending on your taxable income. A serious lender will reconstruct the net figure, so do the calculation yourself before the appointment and avoid asking for an instalment the file cannot justify.

Paperwork that proves your future pension

The EIG (estimation indicative globale), the all-schemes estimate sent from age 55 and then every five years, together with the simulator in your online pension account on info-retraite.fr, gives a first figure. As the date approaches, lenders value an acknowledgement that your pension claim has been filed, then the formal pension award letter. Add the complementary pension statement and any retirement savings contracts likely to pay an annuity. For a foreign pension, a recent statement from the paying body, such as a UK State Pension forecast, plays the same role.

Applying before or after your leaving date

Borrowing while still employed has two advantages: banks like a file from someone in work, and insurance is easier to obtain while you are under 65. Waiting for the pension award, on the other hand, removes doubt about the numbers. The usual compromise is to apply three to six months before leaving, with a recent estimate in hand.

Example: Sylvie, 63, retiring in eight months

Sylvie earns €3,100 net and her total pension is estimated at €2,050. She wants €20,000 of home improvements done before she stops work. Over 72 months at a 6% APR, the instalment comes to about €330, or 16% of her future pension, and with no other credit the application goes through. Over 36 months she would pay €607, or 30%.

Property purchases and the stepped mortgage

For a property purchase, some brokers arrange a prêt à paliers, a stepped loan with higher instalments while the salary is still coming in and lower ones once the pension starts. The bank checks the debt ratio for each period separately. Loans without a mortgage-type guarantee can run until roughly age 85, longer with a mortgage charge, and each lender caps the unsecured amount.

How the steps work for a couple

A couple aged 62 and 61 borrow €120,000 over 12 years at 3.3% to buy a smaller flat while they wait to sell their house. They pay €1,400 a month for the two years they are still working, then about €915 a month for ten years. With combined pensions of €3,000, their debt ratio in the second period is 30.5%.

Insurance points to check

Before 65, most policies still accept death, loss of independence and disability cover. After that, some lenders only offer death and total loss of independence. Work-related guarantees will end when you retire, so there is no point paying for incapacity cover for long. For a mortgage, délégation (choosing an outside insurer) lets you pick a policy designed around this transition.

Typical refusals and how to prevent them

The first reason for refusal is the lack of a reliable pension figure, which leads the lender to assume a cautious one. The second is a debt ratio that looks fine on the salary but excessive on the pension. The third comes from revolving credit lines that are open but unused, which lenders count as potential charges. Supply figures, shorten the term or reduce the amount, and close any reserves you do not need.

Preparing the application, stage by stage

1. Download your all-schemes pension estimate and note the net amount after social charges.
2. Add up your fixed costs after retirement, including top-up health insurance your employer will no longer pay for.
3. Calculate the maximum instalment at 33 or 35% of the pension.
4. Decide between borrowing before leaving, with an employee file, or just after the award letter.
5. Compare several offers and, for property, ask about a stepped loan.
6. Check the age limits of the insurance offered.
7. Keep an emergency fund untouched for the first months of retirement.

Common questions from soon-to-be retirees

Can the bank refuse because I retire in six months? Not for that reason alone, but it can judge the pension insufficient. A figured file limits that risk.

Can my retirement lump sum serve as a deposit? Yes, it is treated like any other personal contribution. The lender will ask for proof of payment.

Will a lender count a pension paid in pounds or dollars? Usually yes, once it is documented and paid regularly, though some apply a margin for currency movements. Having it paid into a French account strengthens the file.

Should I renegotiate my mortgage before leaving? If your rate is about a point above the market, yes: the employee profile makes the operation easier.

Is consolidation possible just before retirement? Yes, to align repayments with the pension, at the cost of a longer term and a higher total cost.

Options that avoid new borrowing

Unlocking employee savings or taking a PER (plan d'épargne retraite) as capital, where the contract allows it on retirement, funds a project without debt. An advance on an assurance-vie policy covers a temporary need. To buy somewhere smaller, a bridging loan backed by the sale of the house avoids borrowing against the pension. Selling first and buying second remains the safest sequence.

If your retirement budget looks tight

Combining work and pension (cumul emploi-retraite) or part-time work can top up income for a few years. Pension funds offer one-off help to modest retirees, especially for housing. Finally, a meeting at a point conseil budget, the free budget advice service, before you leave helps you build a realistic budget and decide with full knowledge.