Depreciable credit

The vast majority of loans granted by banks are amortizable loans: each loan repayment instalment is composed of, on the one hand, interest calculated on the capital remaining due at the beginning of the period and, on the other hand, the depreciation of borrowed capital.


The most common depreciation methods provide for a gradual repayment of capital with constant maturities (the share of interest decreases while the capital portion repaid increases over time) or a constant (linear) repayment of capital with declining maturity ( the share of capital repaid is the same over the entire term of the loan, while the interest gradually decreases).


The borrower must start repaying the loan subscribed as soon as it is released unless a delay is introduced: partial (during the deferred period, the borrower pays only the interest calculated on the borrowed capital) or total ( the borrower begins to repay the principal and the interest only after the deferral - the principal being increased by the interest that will have accrued during that period).
 

The in fine credit

The loan in fine is a contract during which the borrower only reimburses the interest on the loan and the premium of the borrower insurance. The borrowed capital must be repaid at the end, in its entirety.

To this end, the borrower constitutes savings (on a life insurance support for example) during the term of the contract, these savings being pledged to the benefit of the bank and which will therefore be used for reimbursement. Used primarily for the acquisition of rental properties, this type of loan is generally granted for a maximum of 15 years.


Interest for the borrower? They are multiple:
• The borrower insurance protects the heirs for two reasons: in the event of death of the borrower during the loan, 1 ° the insurance reimburses the loan - the property is thus paid at 100%, and 2 ° the heirs recover the savings.
• The deductibility of loan interest and insurance premiums from taxable income allows the borrower to obtain a significant tax benefit.
 

The bridge loan

Nearly half of the buyers of real estate want to sell another property to make their new purchase using the proceeds of the sale. The problem: difficult to match these two events perfectly.


• Good news: credit institutions have developed specific packages to deal with this problem of cash offsets.
• The bridge loan is a short-term credit agreement: the bank gives the seller a partial advance on the future sale of his property to pay for his new residence. This advance (50 to 80% of the value of the property offered for sale) is generally granted for a period that varies between 12 and 24 months.
• When the first property is sold, the borrower refunds the advanced funds, without prepayment penalties.
• The bridge loan thus makes it possible not to miss the opportunity of a new investment while leaving you the time to sell a property already owned in good conditions.

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