Mortgage Refinancing in France, How Does It Work?
Updated on 30 July 2026
Mortgage refinancing in France means replacing one or more existing loans with a single new loan, generally to benefit from a better rate or to simplify your budget management. This article explains how the transaction works, who it is for (in particular to finance a rental investment) and what costs it involves.
- A debt consolidation is classified as "mortgage-related" once mortgage loans represent at least 60% of the total amount, according to the Banque de France.
- The household's debt ratio, insurance included, must not exceed 35% under the recommendations of the HCSF (Haut Conseil de Stabilité Financière, France's High Council for Financial Stability), barring a limited bank exemption.
- Additional cash can be added to the transaction, capped at 15% of the total amount of refinanced loans.
- The transaction includes several additional costs (early repayment penalties, arrangement fees, guarantee) that must be factored into the profitability calculation.
- Certain regulated loans (PTZ, Action Logement loan) and real-estate tax-relief schemes cannot be refinanced without losing their benefits.
What is mortgage refinancing?
This term covers two situations:
- Refinancing a single loan with another bank, for example when interest rates fall.
- Consolidating several loans, provided they include at least 60% mortgage loans (Banque de France); below that threshold, the transaction falls under the consumer credit regime.
How does mortgage refinancing work?
To carry out a loan refinancing, pitting banks against each other, always on the lookout for new customers, can help you obtain more favourable terms, depending on your profile. A few rules help judge whether refinancing is worthwhile:
- A fairly high outstanding capital balance.
- Less than half of the loan's original term already elapsed (in other words, more than half of the term still has to run).
- A rate difference of around one percentage point.
Once terms are negotiated and the file is complete, the bank repays all the loans early with the various lenders. It sets up a single new loan to replace all the previous ones. It typically runs at a fixed rate, in a single monthly payment, over a term agreed between the borrower and the bank.
Refinancing a loan to invest in rental property
Rental property is a source of additional income that appeals to the French. But how do you finance a rental investment when you already have several loans? The bank will scrutinise the financing file, taking into account income but also the repayment of existing loans. Personal loans, mortgages and consumer credit can stand in the way of your project if your debt ratio exceeds the threshold recommended by the HCSF (Haut Conseil de Stabilité Financière), set at 35% insurance included.
Mortgage refinancing can, depending on the situation, make it easier to obtain new financing and add flexibility to your budget. Debt consolidation makes it possible to:
- Obtain, depending on market conditions, a potentially more favourable rate, particularly if your consumer loans carry a higher rate.
- Restructure debts and match charges to income.
- Lower the monthly payment.
- Lower the debt ratio by extending the loan term.
Mortgage refinancing also allows for simpler management with a single bank and a clear view of your financing capacity before taking out a new loan.
Improving the debt ratio and restructuring all outstanding debts can, depending on your profile, make it easier to finance a rental investment.
Goals
Refinancing with additional cash for real estate investments
Refinancing with additional cash is another option worth considering for real estate investments, for example to finance renovation work that will improve the profitability of your rental investment.
While consolidating several loans into a single monthly payment, it also lets you request additional cash to finance a new project. This cash requirement is added on top of the amounts being consolidated. The advantage is that it requires only a single loan going forward. The single monthly payment includes the amount of cash needed to finance the real estate investment.
Certain conditions apply to this additional cash:
- It is capped at 15% of the total amount of refinanced loans.
- The borrower must be able to bear this extra charge and provide the guarantees needed to secure the bank's approval, within the maximum debt ratio recommended by the HCSF (Haut Conseil de Stabilité Financière), set at 35% insurance included.
- Since the cash is allocated to a real estate project, the amounts requested must be justified when applying for the refinancing.
Can you keep the benefits of mortgage loans when refinancing?
Refinancing an existing loan can, in some cases, cause you to lose favourable terms, particularly tax-relief schemes, if the conditions are not met.
Regulated loans: the interest-free loan (PTZ), the Action Logement loan (formerly the "1% logement" scheme) or the social-action loan cannot be refinanced, or they lose their interest-free status or subsidised rate.
Tax benefits tied to a rental property loan: if you refinance a loan linked to a tax-relief scheme (historic monument, the French "Malraux" law, the former Pinel scheme, closed on 31/12/2024, or Censi-Bouvard, closed on 31/12/2022), the tax benefits are kept under certain conditions. The borrower can keep deducting the interest on the original mortgage loan under three conditions:
- The refinancing contract must state that the new loan is intended to replace the original loan.
- The rental income tax return must mention the refinancing and the new loan as replacing the previous one; it is advisable to keep the supporting documents for both loans in case of a tax audit.
- The amount of interest deducted for tax purposes must not exceed the original amount.
What are the additional costs of a mortgage refinancing?
The additional costs of a mortgage refinancing mainly include early repayment penalties, the new bank's arrangement fees and the cost of the new guarantee. To assess the real value of the transaction, all these additional costs should be added to the amount of the new loan.
- Under Article R313-25 of the French Consumer Code, early repayment penalties cannot exceed 6 months of interest on the capital repaid, and may not exceed 3% of the outstanding capital before repayment.
- The new bank's arrangement fees typically represent between 0.5% and 1.5% of the amount borrowed.
- The cost of the new loan's guarantee differs depending on whether the previous guarantee was a mortgage lien or a bank surety.
In the first case, notary fees apply for the release of the mortgage lien, typically between 0.3% and 0.6% of the original amount borrowed, on top of the cost of the new guarantee.
In the second case, if the original loan was repaid without incident, part of the contribution to the guarantee fund is refunded by the surety provider, usually around 75% of the amount paid, which can help fund part of the new loan's guarantee.
Mortgage refinancing: a transaction to calculate before signing
Be careful: a refinanced loan always costs more than the original loan; even so, mortgage refinancing has advantages but also costs and limits to weigh before any decision.
To compare the options available for your situation, online simulators exist, but depending on your investor profile, it can be useful to get help from a qualified professional (a loan broker) to structure the financing. To compare other real estate financing options, see our mortgage loan guide. This article does not constitute personalised advice.
Frequently asked questions
Is mortgage refinancing always worthwhile?
No, not always. The transaction is only worthwhile if the rate gap reaches at least 0.7 to 1 point, if the outstanding capital is significant, and if more than half of the loan's term still has to run. All additional costs (penalties, guarantee, arrangement fees) must also be factored into the calculation before deciding.
Can an interest-free loan (PTZ) be included in a refinancing?
No. Regulated loans such as the PTZ or the Action Logement loan (formerly the "1% logement" scheme) cannot be refinanced without losing their interest-free status or subsidised rate. They must stay out of the consolidation to keep their benefits.
What is the difference between mortgage refinancing and consumer debt consolidation?
A debt consolidation is classified as "mortgage-related" once mortgage loans represent at least 60% of the total amount refinanced. Below that threshold, it is treated as consumer credit, with a shorter maximum term.
Can mortgage refinancing help finance a rental investment?
Yes, by lowering the household's debt ratio or by adding extra cash, capped at 15% of the total refinanced amount. This can make it easier to obtain new financing, provided the 35% threshold recommended by the HCSF is respected.
Does mortgage refinancing let you recover part of the bank guarantee on the old loan?
If the old loan was guaranteed by a surety such as Crédit Logement and repaid without incident, part of the contribution to the guarantee fund is refunded, usually around 75% of the amount paid. This sum can then help fund part of the new loan's guarantee.
Sources
Banque de France, debt consolidation: the mortgage/consumer classification threshold
Banque de France, publications and decisions of the Haut Conseil de Stabilité Financière (HCSF)
Reassurez-moi, mortgage-lien release fees
Reassurez-moi, refinancing with additional cash
Crédit Logement, the guarantee-fund refund process
Société Générale, mortgage loan arrangement fees
Action Logement, the homeownership loan (formerly the "1% logement" scheme)
Regulatory disclaimers: Marketing communication. Investing carries a risk of partial or total capital loss. Past performance is not a reliable indicator of future performance. This article is provided for information and educational purposes only; it does not constitute personalised investment advice, a buy or sell recommendation, or tax advice. Before investing, read the Key Information Document (KID) and, where relevant, consult an authorised adviser. Finary SAS, an investment firm authorised by the ACPR (no. 19283), member of AMAFI. Insurance broker registered with ORIAS (no. 21001279), member of the CNCGP (association approved by the AMF). Crypto-Asset Service Provider (CASP) authorised by the AMF under the MiCA regime, references no. A2026-026 and no. N2026-008.
