You sell your home, receive an inheritance or a bonus: you want to pay off your French mortgage before term. The bank then charges "early-repayment penalties", known in France as IRA (indemnités de remboursement anticipé) — an amount that looks opaque. It is not: the French Consumer Code (Code de la consommation) caps these penalties with a strict double ceiling and lists three situations in which they are not due at all. On a €250,000 loan at 3.5% paid off after five years, the maximum penalty the bank can charge is about €3,549 — not one euro more.
You still need to know which cap applies to your case, check whether you qualify for a legal exemption — and ask yourself whether repaying early is even a good move: for borrowers from the 2020-2022 vintage, at rates close to 1%, the answer is often no.
The IRA can never exceed the lower of two amounts: six months' interest on the capital repaid at the loan's average rate, or 3% of the outstanding capital before repayment (article R. 313-25 of the French Consumer Code).
What this article covers
This article details how the French early-repayment penalty is calculated: the double legal cap of article R. 313-25 of the Consumer Code, the three exemptions of article L. 313-48, a fully worked example on a €250,000 loan, the comparison between an external buyout and an internal renegotiation, and the financial trade-off between repaying and investing.
Early repayment: what the French Consumer Code says
Article L. 313-47 of the French Consumer Code guarantees the borrower's right to repay early, in part or in full. The same article, however, allows the contract to prohibit partial repayments equal to or below 10% of the initial loan amount, unless the payment clears the balance. This threshold is assessed against the initial amount borrowed — not the outstanding capital — and requires an express clause: without one, the bank cannot refuse a partial repayment, however modest.
The penalty itself is only due if the contract stipulates it, and its amount is capped by article R. 313-25 (created by decree No. 2016-884 of 29 June 2016, in force since 1 July 2016): it may not exceed "the value of one half-year of interest on the capital repaid at the average rate of the loan, without exceeding 3% of the capital outstanding before the repayment". The exemptions sit in article L. 313-48, inherited from Act No. 99-532 of 25 June 1999: they apply to contracts signed on or after 25 June 1999.
| Provision | What it provides | Reference / entry into force |
|---|---|---|
| Art. L. 313-47 Consumer Code | Right to repay early; possible clause on partial repayments ≤ 10% of the initial amount; principle of the capped penalty | 2016 recodification, in force |
| Art. R. 313-25 Consumer Code | Double cap: six months' interest on the capital repaid, limited to 3% of the outstanding capital | Decree No. 2016-884 of 29 June 2016 (in force since 1 July 2016) |
| Art. L. 313-48 Consumer Code | Three cases of full IRA exemption | Contracts signed on or after 25 June 1999 (Act No. 99-532) |
| Art. L. 313-49 Consumer Code | Prohibition of any other fee or indemnity in the three exemption cases | 2016 recodification, in force |
| Art. L. 313-39 Consumer Code | Renegotiation of the loan by a simple amendment with the original bank | 2016 recodification, in force |
These references come from the 2016 recodification — the substance of the regime has been unchanged since the Scrivener Act and the Act of 25 June 1999. The 2026 Finance Act (Act No. 2026-103 of 19 February 2026) changed nothing: the scale of article R. 313-25 has never been amended since its creation in 2016.
Calculating the IRA: the two legal caps in practice
The calculation rests on two caps computed separately — the bank may only charge the lower one. Their bases are not applied to the same amount.
Cap No. 1 — six months' interest on the capital repaid
The first cap equals six months of interest on the capital you repay, at the loan's average rate. The formula: capital repaid × rate × 6/12.
Cap No. 2 — 3% of the outstanding capital before repayment
The second cap equals 3% of the capital outstanding before the transaction — not of the capital repaid. On a full repayment, the two bases coincide; on a partial repayment, they diverge: if you repay €50,000 while €202,816 is still owed, the six months' interest is computed on €50,000, but the 3% is computed on €202,816.
The lower of the two always applies
A practical rule: six months' interest represents half the annual rate. Whenever the loan rate is below 6%, half the rate is below 3% — the "six months' interest" cap is the binding one. And the average French mortgage rate stands at 3.26% in June 2026 (3.24% in Q2, Observatoire Crédit Logement/CSA): for virtually all outstanding loans, it is the one that limits the IRA.
| Criterion | Cap No. 1 — six months' interest | Cap No. 2 — 3% of the outstanding capital |
|---|---|---|
| Formula | Capital repaid × average loan rate × 6/12 | Outstanding capital before repayment × 3% |
| Base | Capital repaid | Outstanding capital before the transaction |
| When it binds | Loan rate below 6% | Loan rate above 6% |
For a fixed-rate loan — the vast majority of French mortgages — the "average rate of the loan" is simply the nominal rate of the contract: that is the rate used to compute the six months' interest.
PTZ: a penalty of zero by construction
The PTZ (prêt à taux zéro — the French zero-rate loan) generates no IRA: since the cap is six months' interest at the loan's average rate, a 0% rate produces a mathematically nil penalty. Your PTZ offer may, however, set conditions on how it can be repaid early: re-read it before deciding. On eligibility conditions, see the 2026 PTZ brackets and zones.
One last lever, often forgotten: the IRA clause is negotiated before signing. Reduction, or even removal beyond a minimum holding period: some banks accept it, as economie.gouv.fr points out. This is banking practice, not a legal right: once the contract is signed, the clause applies.
Worked example: the IRA on a €250,000 loan at 3.5%
Profile: a €250,000 loan over 20 years (240 months) at 3.5% excluding insurance — close to the 2026 averages (rate 3.26% in June, term 251 months, Observatoire Crédit Logement/CSA). You sell the property after 5 years, i.e. 60 monthly instalments, and pay off the loan.
| Item | Calculation detail | Amount |
|---|---|---|
| Monthly instalment (excl. insurance) | €250,000 at 3.5% over 240 months | €1,449.90 |
| Outstanding capital after 60 instalments | Amortisation schedule (capital repaid: €47,184) | ≈ €202,816 |
| Cap No. 1: six months' interest | €202,816 × 3.5% × 6/12 | ≈ €3,549 |
| Cap No. 2: 3% of the outstanding capital | €202,816 × 3% | ≈ €6,084 |
| Maximum IRA chargeable | The lower of the two caps | ≈ €3,549 |
Six months' interest at 3.5% represents 1.75% of the outstanding capital — well below the 3% cap. The bank therefore cannot charge more than €3,549, whatever the wording of the clause — it can, on the other hand, charge less. And if the sale follows a job relocation, the IRA drops to zero (see below).
If you sell in order to buy elsewhere, also factor into your financing plan the 2026 notary fees, which now vary by department: they weigh far more heavily than the IRA in the total cost of the operation.
The three legal IRA exemptions (article L. 313-48)
For contracts signed on or after 25 June 1999 (Act No. 99-532 on savings and financial security), no penalty may be charged when the early repayment is motivated by one of the three situations listed in article L. 313-48 of the French Consumer Code. Article L. 313-49 locks the mechanism in: in these cases, the lender may not charge any other fee or indemnity.
1. Sale of the property after a change of workplace
The exemption covers the sale of the property following a change in the place of professional activity of the borrower or their spouse. The condition is twofold: the relocation alone is not enough — the repayment must be motivated by the sale of the home resulting from that change. A loan buyout or a renegotiation after a relocation, without a sale of the property, does not qualify.
2. Death of the borrower or their spouse
A repayment motivated by the death of the borrower or their spouse is exempt from the IRA. The exemption protects situations where the capital is repaid by the estate or by the surviving spouse rather than by the borrower's insurance.
3. Forced termination of employment
Third case: the forced termination of the professional activity of the borrower or their spouse — redundancy being the typical example. The "forced" character is decisive: a voluntary departure, such as a resignation, does not fall within this scope. If in doubt, document your situation with the bank before paying off the loan.
⚠️ Warning: the "job relocation" exemption requires the sale of the property — a relocation followed by a mere loan buyout is not enough. Outside these three cases, the contract's IRA clause applies, within the double legal cap.
What to check before paying off your loan: re-read the "early repayment" clause of your offer (penalty amount, clause on partial repayments ≤ 10%); check the three exemption cases of article L. 313-48; ask your bank for a dated statement detailing the outstanding capital and the penalty.
Repay early or invest: the 2026 financial trade-off
Early repayment should not be a systematic reflex. The right way to look at it: repaying a loan "earns" the equivalent of its rate, tax-free and risk-free — to be compared with the yield of the risk-free investments available.
A loan at 1%: keep the loan and invest
If you borrowed between 2020 and 2022 at around 1%, your debt costs less than regulated savings yield: the Livret A has paid 1.70% net of tax since 1 August 2026 (1.50% from February to July), and euro funds in life insurance returned an average of 2.6% gross in 2025 (France Assureurs), i.e. roughly 2.15% net of social charges. Every euro that clears a 1% loan "earns" 1%; placed in a Livret A, 1.70%. The margin is thinner than in the days of 3% risk-free investments, but the trade-off still argues against repayment — before even counting the IRA.
A loan at 3.5%: repaying beats every risk-free investment
Conversely, for 2023-2024 borrowers at 3.5% or more, repaying is equivalent to a risk-free investment at 3.5% — above both the Livret A (1.70%) and euro funds (≈2.15% net). Even the maximum IRA of the example above (€3,549, i.e. 1.75% of the capital cleared) is absorbed in about one year of yield differential. With an exemption or a negotiated clause, the calculation tips even more clearly towards repayment.
External buyout or internal renegotiation: two very different bills
If your goal is not to pay off the loan but to lower its rate, two routes exist. A buyout by a competing bank is legally an early repayment of the original loan: it triggers the IRA (unless negotiated away), new guarantee costs and, where applicable, the release of a mortgage charge. A renegotiation with your own bank takes the form of a simple amendment (article L. 313-39 of the Consumer Code): no IRA, no new guarantee, but amendment fees may be charged. These fees are not regulated: freely set by each institution, not systematic and negotiable, they most often range from a few hundred euros to about 1% of the outstanding capital.
Before borrowing again, re-check your capacity: our guide on the salary needed to borrow €200,000 or €300,000 details the income required in 2026.
Key takeaway: the lower your loan rate, the less attractive early repayment is. In 2026, the dividing line sits between the Livret A yield (1.70% net) and euro funds (≈2.15% net): below it, keep the loan; above 3%, repaying wins.
Common mistakes when calculating the IRA
Mistake No. 1 — Confusing 6 months' interest with 6 months' instalments
The legal cap targets six months of interest: the interest portion only, computed at the loan's average rate on the capital repaid. Six months of instalments — capital included — would give a very different figure: nearly €8,700 in our example, versus €3,549 of IRA actually chargeable. If your bank quotes an amount close to six months of instalments, have it recalculated.
Mistake No. 2 — Calculating the 3% cap on the wrong base
The 3% cap applies to the capital outstanding before the repayment — not to the capital repaid, nor to the amount initially borrowed. The six months' interest applies, for its part, to the capital repaid. On a partial repayment, confusing the bases skews the calculation — usually to the borrower's detriment. And the bank does not "pick" the cap that suits it: the lower one always prevails.
Mistake No. 3 — Believing a job relocation is enough
The exemption of article L. 313-48 requires the sale of the property following the change of workplace. A relocation followed by a loan buyout or a renegotiation, without a sale, does not exempt you from the IRA.
Mistake No. 4 — Overlooking the 10% clause
The contract may prohibit partial repayments equal to or below 10% of the initial amount of the loan (not of the outstanding capital), unless the payment clears the balance. Check two points: does the clause exist, and does your repayment exceed the threshold? Without a clause, the bank cannot refuse.
⚠️ Warning: the three exemptions only apply to contracts signed on or after 25 June 1999. And neither a sale without a change of workplace, nor a resignation, nor a voluntary retirement qualifies for the exemption.
Work out your IRA before paying off your loan
Mon Simulateur Immobilier early-repayment simulator
Enter the capital, rate, term and planned repayment date: the simulator computes your outstanding capital, the two legal caps (six months' interest and 3% of the outstanding capital), the maximum IRA chargeable and the interest saved, for a full or partial repayment.
To go further: the loan-buyout simulator to compare against a competing offer, IRA included, and the amortisation schedule to read your outstanding capital month by month.
Conclusion
There is nothing arbitrary about the IRA calculation: the lower of two caps — six months' interest on the capital repaid, or 3% of the outstanding capital — limits what the bank can charge, and three legal exemptions cover the sale after a job relocation, death and forced termination of employment. At current rates, all below 6%, the six months' interest cap is the one that applies. The strategic question remains: at 1%, keep your loan and invest; at 3.5%, repaying beats every risk-free investment of 2026.
Before going to see your bank, put precise figures on the operation. The Mon Simulateur Immobilier early-repayment simulator computes your outstanding capital, the maximum IRA chargeable and the net interest saved, to decide between a full repayment, a partial one or the status quo.
