Loans are among the different types of credit. Unlike the repayable loan conventionally used for the financing of a real estate, the credit in fine gives the opportunity to the borrower to repay the totality of the capital due in a single payment, at maturity of the contract. The advantage? The monthly payments are only used to pay the interest and thus prove to be less important than in the framework of a traditional loan. Explanations.
How does a loan ultimately work?
By definition, a loan in fine works in reverse of a conventional loan. While the depreciable credit consists in repaying its capital while paying its interest to the lending establishment, the loan in fine offers a singular possibility: to repay the totality of the capital at the end of the contract, in a single installment.
If you choose this option, you will still have to pay monthly payments. But these will only include interest (as well as borrower insurance costs), not principal.
The advantage? During the entire term of the loan, you can place the money saved on a savings book or life insurance, and thus capitalize enough for the final repayment of the mortgage in fine. Or decide to resell the property to settle the loan.
Who is the priority for a loan in fine?
The loan in fine is not a conventional mortgage. It is rather intended for the financing of a rental investment because of the tax advantages to which it gives right:
- Loan interest can be deducted from collected property income;
- If this rental income turns out to be lower than the interest on the loan in fine, it becomes possible to charge this land deficit against taxable income.
In fact, the interest of the mortgage ultimately is mainly tax: it allows you to make significant tax savings, especially in the event of a high tax rate … And to place the unspent money in monthly payments, so to earn savings income!