Mortgage ranking / lien priority
The priority order in which mortgage creditors are repaid in the event of foreclosure and forced sale of the property. First ranking is the most protective; a second-rank lender is only repaid after the first-rank creditor is fully settled. The same bank may accept a second-rank position in a debt consolidation or supplementary loan context, but on different rate and security terms.
Key points
- First rank offers the best protection; subsequent ranks carry higher non-repayment risk.
- Rank is determined by the date of registration of the security at the mortgage registry.
- A second-rank creditor is only repaid after the first-rank debt is fully settled.
- Rate and security conditions vary significantly depending on the rank the bank accepts.
Frequently asked questions
Why would a bank accept a secondary mortgage rank?
A bank may accept a second rank in a debt consolidation where it refinances multiple debts under a single security, or for a supplementary loan on an already mortgaged property. The increased risk is generally offset by a higher rate or additional security conditions.
How does mortgage ranking influence the terms of a debt consolidation?
In a debt consolidation with mortgage security, the bank buying out all debts generally wants first rank over the property. If an existing mortgage is retained, the new loan will be second rank, which may increase the cost of financing or require release of the previous mortgage.
What is the difference between mortgage ranking and the priority of a surety?
Mortgage ranking applies to real securities registered against the property. A surety is a personal guarantee and creates no ranking over the property: the surety organisation turns to the borrower after paying the bank, without any priority right over the proceeds of a forced sale.
In practice
A borrower owns a property worth €300,000 encumbered by a first-rank mortgage for a remaining balance of €180,000. Their bank grants a renovation loan with a second-rank mortgage for €40,000. In the event of foreclosure, the first creditor is repaid in full before the second can recover anything.
Official sources
- Article 2418 of the Civil Code (ranking of mortgages) · Légifrance
- Mortgage credit (official guide) · Service-Public.gouv.fr
- Housing and financing information · ANIL