Put your savings up as security instead of selling them

A nantissement is a pledge: the borrower assigns a financial investment as security for a loan without selling it. A French life insurance policy (assurance-vie), a securities account, a PEA (French equity savings plan) or a term deposit stays invested and keeps earning, but the lender can recover what it is owed from it if repayments stop or the borrower dies.

Many people aged 50 to 64 have savings built up over twenty or thirty years, just as their age starts to complicate borrower insurance or shorten the terms on offer. Putting those savings up as security reassures the lender, can reduce the insurance it demands, and avoids cashing in a policy opened more than eight years ago, which is valuable for tax. For English speakers in France who hold an assurance-vie, often recommended to them on arrival for estate planning, this is one of the most useful and least known levers.

Which investments can be pledged

The French Civil Code governs pledges of claims in articles 2355 onwards; the Monetary and Financial Code covers securities accounts in article L211-20, and the Insurance Code covers life policies in article L132-10. In practice the bank does not give every asset the same weight: the more volatile the investment, the smaller the share of its value it counts.

What a working senior gains

The first advantage is tax. Surrendering an assurance-vie to fund a purchase triggers tax on the gains and loses the policy's seniority. A pledge keeps the annual allowance that applies after eight years and the favourable inheritance treatment. The second is access to credit: a bank hesitant about a 61-year-old applicant often changes its mind when offered liquid security.

The third concerns borrower insurance. No law requires it; the bank does. With a pledged policy covering a large part of the capital, some lenders will accept a reduced insured share, or death cover only, which cuts the total cost sharply for someone with a heavy medical history.

Worked example: a 60-year-old executive

Hélène, 60, a sales director earning 5,100 euros net a month, is buying a 180,000-euro two-room flat to let. She holds an assurance-vie worth 140,000 euros, 70 % in euro funds. Rather than cash it in, she borrows 160,000 euros over 12 years and pledges the policy. The bank counts about 120,000 euros of its value and limits the insurance to 50 % of the capital.

At 3.40 % over 12 years, the payment before insurance is around 1,355 euros, 27 % of her earned income, before the rent comes in. Her savings keep growing and remain available to pass on to her children once the loan is repaid. If Hélène retires in four years, the bank has already checked that her pension plus the rent will cover the instalment.

The Lombard loan for larger portfolios

For larger financial estates, private banks offer the Lombard loan: an advance or credit line secured on a portfolio, often repayable in one go after one to four years. The rate tracks Euribor or €STR plus a margin of around 1 % to 1.5 %. Wealth management firms cite an entry ticket of roughly 125,000 to 250,000 euros of assets.

Risks to weigh before signing

A pledge freezes your savings: no partial withdrawal without the lender's consent. On equity funds, a sharp market fall can trigger a margin call, an obligation to add money or repay part of the loan. If you cannot, the bank may sell the securities at the worst possible moment.

• Accepting beneficiary: if a beneficiary has formally accepted the life policy, their consent is needed to pledge it.
• Switches restricted: some agreements forbid moving into riskier unit-linked funds.
• Paperwork costs: drafting the amendment and notifying the insurer or account holder.
• Estate: on death, the lender is paid first, up to the outstanding debt.

Common errors made by borrowers over 50

Pledging a high-risk policy against a long loan exposes you to margin calls precisely when you retire. Another error is accepting the pledge on top of 100 % insurance and a guarantee. The security should replace something, not pile up. Negotiate the removal of the mortgage charge or a lower insured share in return.

A third is assuming only the bank that manages the investment will accept it. A policy with an independent insurer can secure a loan at another bank, provided the insurer is notified and agrees to the amendment. A broker or wealth adviser can arrange this. Expatriates should note that French lenders strongly prefer assets held with a French or EU institution they can formally notify; a UK ISA or a US brokerage account is much harder to pledge to a French bank.

Setting up a pledge in six steps

1. Review your investments: value, split between euro funds and unit-linked funds, date opened.
2. Check whether a beneficiary has accepted the policy and obtain their consent if so.
3. Ask the bank what share of each asset it will count and how margin calls work.
4. Negotiate what you get in return: lower insured share, no mortgage charge, longer term.
5. Sign the pledge deed, which is notified to the insurer or account holder.
6. Obtain a written release (mainlevée) at the end of the loan to regain full use of the investment.

What the security costs

The pledge itself is cheap: a few hundred euros in paperwork depending on the bank, far less than a notarised mortgage. The real cost is indirect, since the frozen savings cannot be used for anything else. The overall rate, insurance included, remains capped by the usury ceiling, set at 4.68 % for a fixed-rate mortgage of 10 to 20 years in the fourth quarter of 2026.

Other routes if a pledge does not suit you

An advance on an assurance-vie (avance sur contrat) lets you borrow directly from the insurer, often up to 60 % to 80 % of the euro-fund balance, without a bank, in return for interest. A guarantee from a specialist body such as Crédit Logement replaces a mortgage charge for a property purchase. For homeowners, a mortgage-backed loan remains an option if financial savings are too small.

Finally, using part of the policy as a deposit and pledging the rest often strikes the best balance between tax, borrowing cost and security for your family.

Pledging savings: frequently asked questions

Does my assurance-vie keep earning while it is pledged? Yes. Interest and gains keep accumulating; only withdrawals need the lender's consent.

Can a PEA be pledged? Yes, but the bank counts a smaller share of its value because it is invested in shares.

Does a pledge remove the need for borrower insurance? Not automatically. It allows you to negotiate lighter cover; the final decision lies with the lender.

What happens if I retire during the loan? Nothing changes for the security. The bank will have checked at the outset that your pension covers the payment.

Can I sell the pledged securities? Only with the bank's consent, and it will often require the proceeds to stay in the account or repay part of the loan.