The employer loan, better known today as the “Action Logement loan”, is a type of mortgage available to employees of companies with 10 or more employees. This loan to employees in the non-agricultural private sector is based on a contribution paid by the companies. It applies to plans to purchase a main residence in new or old.
How does the employer loan work?
Need a boost to finance a real estate transaction? The employer loan is there for you. This is an additional loan backed by a conventional mortgage loan granted at advantageous rates. It is used to partially finance the acquisition of housing for the purpose of primary residence, whether:
- In the new (new apartment or land to build a detached house);
- In the old (with or without work).
In addition, the accommodation must display a level of energy performance greater than or equal to “D” (the scale going from “A” to “G”).
The amount of the 1% employer loan can be up to 30% of the total amount necessary for the acquisition, with a range between $ 7,000 and $ 25,000 depending on the geographic area concerned, and for a period of 20 years maximum. Possibilities of increases have been foreseen in case of professional transfer, essential work for the improvement of housing or its adaptation to disabled people, or for the acquisition of social housing.
The employer loan can also be used to finance work, for a maximum amount of $ 10,000 (with the possibility of an increase depending on the type of work).
The story of the 1% employer
It was in 1953 that the employer loan was set up in France, under the name of “1% housing”, or Employers’ participation in the construction effort (PEEC). The context is that of the immediate post-war period, when the country is experiencing a major housing crisis. The government therefore created a system which consisted in asking companies in the private sector (excluding the agricultural sector) with more than 10 employees to pay a contribution of around 1% of their payroll, in order to help employees access to the property.
After 1992, the participation rate dropped from 1% to 0.45%. Companies always pay the same amount, or almost (0.95% of their total payroll exactly), but 0.5% is donated to the National Housing Assistance Fund which is responsible for funding several allowances for households. The expression “1% employer”, or “loan 1 employer”, therefore became improper.
Who can benefit from the 1 employer loan?
All private sector (non-agricultural) employees working for companies with 10 or more employees, regardless of their seniority, as well as former employees who have retired for less than five years can benefit from the employer loan.
Also concerned are the unemployed under 30, salaried students, and students who receive a scholarship.
In all cases, obtaining the 1% employer loan is subject to means test. These are aligned with the social housing accessibility grids
Other devices backed by the employer loan
There are also other systems backed by the employer loan, depending on the situation of the employees and their real estate project:
- For employees in difficulty: the Sécuri-Pass loan which corresponds to a zero-rate advance on the monthly payments of a mortgage, or aid for the refinancing of a mortgage or a home buy-back;
- For tenants: rental accommodation offers and Loca-Pass aid (financial advances and rental guarantees);
- For lessor owners: loans to finance improvement works, specific bridging loans in the event of professional mobility, etc.
What You Should Know About This Type Of Loan
Important thing to know: the employer loan is not attached to the employment contract. This means that if the borrower leaves his company following a resignation or dismissal, and this after obtaining a 1% employer loan, he will not be subject to any obligation to repay the loan in advance.
Another essential point: two salaried spouses can fully benefit from the 1 employer loan granted by their respective company. However, this possibility does not allow them to exceed the ceilings accepted for the loan.
Finally, last thing. To obtain an employer loan, you can:
- Go directly through your employer. In this case, you must give him an official request for a 1% employer loan. It is free to accept or not this request, depending on the priorities and the use that has already been made of the funds.
- Go through Action Logement to request a form to give to your employer, who will fill it out and send it himself to the organization.
Note that since civil servants are not part of the private sector, they are not entitled to the employer loan. However, a particular type of credit is open to them: the official loan.