A loan with a pledge (crédit avec nantissement) is credit whose repayment is guaranteed by an investment the borrower assigns to the lender as security: a French life insurance contract (assurance-vie), a securities account, a PEA share savings plan or a fixed-term deposit. For a senior with savings, it is often the simplest and cheapest form of security, and it goes a long way towards offsetting the hurdles linked to age and borrower insurance.
Banks like the principle: if repayments stop, they recover the money from a clearly identified investment, with no property repossession procedure. For a borrower of 60 or 65, the savings stay invested and keep earning, the tax seniority of an assurance-vie is preserved, and there is no need to sell shares at a bad moment to pay for a purchase.
Which investments can be pledged?
A pledge covers intangible assets and is governed by articles 2355 onwards of the Civil Code. The most widely accepted are life insurance, securities accounts, fixed-term deposits and unregulated savings accounts. A PEA may be accepted depending on the institution. Units in SCPI property funds are admitted less often. The savings should normally be held with the lender or with an insurer prepared to take part.
How much of your savings does the bank count?
The bank applies a haircut according to the risk of each asset. The euro funds (fonds en euros, capital-guaranteed funds) of a life insurance policy are often counted at up to 100% of their value. Unit-linked funds in a multi-fund contract are typically counted at roughly 50% to 80%. An equity portfolio rarely gets more than 50%. If the pledged value does not cover the loan, extra security will be required.
| Pledged asset | Share of value usually counted | Watch point |
|---|---|---|
| Life insurance euro fund | Up to 100% | Insurer's consent, any accepting beneficiary |
| Unit-linked funds | 50% to 80% | Top-up call if markets fall |
| Equity securities account | Rarely above 50% | Switches need the lender's approval |
| Fixed-term deposit, savings account | Close to 100% | Money locked until repayment |
What does setting it up cost?
Low cost is one of the pledge's strongest points. One broker quotes registration fees from a few tens of euros to about 120 euros depending on the amount, with a total rarely above 500 euros. By comparison, a mortgage charge can cost up to 2% of the capital borrowed and a guarantee from a specialist body around 1%. On 150,000 euros, the saving runs into thousands of euros.
Example: Françoise, 62, senior manager
Françoise holds a 150,000-euro life insurance policy: 100,000 euros in the euro fund and 50,000 euros in unit-linked funds. She buys a 120,000-euro studio flat to let. Her bank offers an eight-year interest-only loan (prêt in fine) at 3.8%, secured by a pledge of the euro fund and part of the units. She pays 380 euros a month in interest; the capital falls due when she is 70.
With a 4,200-euro salary and 450 euros of expected rent, the burden is light: 380 euros is 9% of her earned income. Once retired, her estimated 2,900-euro pension plus the rent still cover the interest comfortably. At maturity she can repay through a partial withdrawal from the policy, or sell the studio if the market is favourable.
Amortising loan, interest-only loan or Lombard credit
A pledge can back a standard amortising loan, where you repay capital and interest each month and the savings are merely a safety net. It also suits the interest-only loan, where only interest is paid until the end and the capital is repaid in a single sum. Lombard credit, offered mainly by private banks, is aimed at larger portfolios over short terms.
Lombard credit in practice
This type of financing is generally indexed to Euribor plus a margin often between 1 and 1.5 points, for terms of one to four years. Institutions that offer it frequently require financial assets of at least 125,000 to 250,000 euros. It is used to fund a purchase while waiting for a sale, to give children a deposit or to seize an investment opportunity.
What a pledge does not always replace
Some lenders agree to reduce, or even waive, borrower insurance when the pledge covers the whole loan. Others still insist on at least death cover. The APR including insurance must remain under the usury ceiling, which is 4.09% for a fixed-rate loan under ten years in the fourth quarter of 2026. Ask the bank before signing.
Rules specific to a pledged life insurance policy
Pledging an assurance-vie is formalised by an amendment signed by the policyholder, the insurer and the lender, or by a deed served on the insurer. If a beneficiary has formally accepted the policy, that person's consent is needed, as article L132-10 of the Insurance Code provides. During the loan, withdrawals and switches into riskier funds require the creditor's approval.
Expatriates sometimes hold savings in a UK ISA, an offshore bond or a US brokerage account. French banks rarely accept those as pledged assets, because the security must be enforceable under French law with a cooperative custodian. Bringing part of the savings into a French policy or account a few months before applying is often the practical answer.
Traps to avoid
Pledging an entire policy when a partial pledge would do needlessly freezes your emergency savings. Choosing highly volatile unit-linked funds exposes you to a call for extra security if markets drop. Another mistake is forgetting that on death, the outstanding loan is taken from the policy before beneficiaries are paid, which alters the estate plan you had in mind.
How to obtain the loan
- Draw up an exact list of your investments, their value and their split between assets.
- Decide how much you are willing to lock up without touching your rainy-day fund.
- Ask your bank, insurer or a broker which assets they accept and what haircuts they apply.
- Compare an amortising loan and an interest-only loan in the light of your age and income.
- Have the pledge amendment drawn up with the insurer and, where relevant, obtain the accepting beneficiary's consent.
- Check the offer's clause on releasing the pledge at the end of the loan.
Frequently asked questions
Can I keep paying into a pledged policy? Yes, but new payments may fall within the scope of the pledge; limiting the pledge to a set amount avoids that lock-up.
At 70, will a bank lend against my life insurance? This is one of the situations where age matters least, because the security does not depend on your health. The term will still be fairly short.
How is this different from a policy advance? An advance (avance sur contrat) is granted by the insurer itself against the policy, with no bank involved; a pledge secures a bank loan.
Does pledging cost me the policy's tax seniority? No, nothing is cashed in; the contract stays open and keeps its original start date.
Options if you do not have enough savings to pledge
A partial pledge can be combined with a guarantee or a mortgage on unencumbered property. A straightforward mortgage-backed loan secured on your home suits owners with limited savings. A policy advance, capped by the insurer at a fraction of the surrender value, funds one-off needs with no bank and no health questionnaire.
Organisations and offers to contact
- CAFPI : Credit broker explaining the pledge as loan security, eligible assets, registration fees and how it compares with a mortgage charge or a guarantee.
- Auguste Patrimoine : Wealth management firm with a credit brokerage arm, listing institutions that offer Lombard credit and their lending ratios by asset type.
- Cleerly : Wealth advisory firm explaining Lombard credit, interest-only repayment and how much can be borrowed against euro funds or unit-linked investments.