Choosing the right credit in the end
Credit in fine is a form of mortgage, which has been specially designed for rental investment. As opposed to the classic mortgage loan, the repayment in a mortgage loan ultimately takes place in two stages. Initially, the debtor only reimburses the interest on the loan. Then, when the contract ends, he reimburses the full amount granted to him.
Although being interesting in the context of the acquisition of an important heritage, generally, the loan in fine wants to be expensive. Interest will be based on the amount of principal borrowed. This is why it is important to choose your credit correctly in the end.
To do this, we advise you to go through a comparator loan in fine or a loan simulator depreciable. Many criteria are taken into account at the time of subscription: the contribution (in the case of a mortgage), the debtor's salary and income or even land income and his financial, personal and professional profile. The goal is to determine its debt capacity. With an online simulation tool, the fees and costs incurred will be developed down to the smallest detail. You can then make your choice in any case.
- Is insurance compulsory for a loan in fine?
- The concept of contribution for the case of a loan in fine
- Benefits and risks of credit in fine
- Is the cost of a loan in fine more expensive?
Is insurance compulsory for a loan in fine?
In any mortgage, including the loan in fine, intended for the financing of a rental investment. It is not the legislation that it imposes, it is rather a provision put in place by credit institutions. It is a guarantee for the financial institution to be reimbursed for the significant capital that it has agreed to grant.
You have to be careful, because alongside interest, insurance can also drive up the total cost of credit. You have to do a loan insurance simulation in fine before choosing. Indeed, the law allows the debtor to take out insurance outside the bank.
The concept of contribution for the case of a loan in fine
Before granting a loan in fine, the bank will require some guarantees from the debtor. Among these guarantees, the contribution will be part of its requirements. This contribution amounts on average to 10% and can go up to 50% of the amount borrowed. It is more or less the principle that in the framework of the classic mortgage. The contribution will be subject to a pledge on an investment, generally a type of life insurance. Every month, the borrower must update the investment, which will allow the loan to be repaid at maturity.
The subscription to loan insurance will also be required, it will serve as cover for the bank in the event of the debtor's inability to work. To avoid increasing costs, you have to find suitable insurance.
Benefits and risks of credit in fine
Contrary to popular belief, the difference in interest rates between conventional mortgage loans can be a real advantage. The purpose of the provision is to encourage rental investment. A system of deduction of interest on the loan was therefore set up. And if the deductible amount goes beyond net income, a land deficit device has been planned to correct. For big investors, this is a great way to lower taxes.
However, for investors who are not seasoned, the risks are great: like that of tenant default.
Is the cost of a loan in fine more expensive?
Indeed, at first glance, compared to a depreciable credit, the loan in fine can be much more expensive. But in reality, depending on the profile of the borrower and his financial situation, the tax reduction could be a real asset. In other words, compared to the costs, the loan in fine can seem much heavier. Especially with a loan in fine, one can ask for a substantial contribution which can go up to 50% of the borrowed sum. But associated with all the other criteria of the rental investment, it can be advantageous.
We advise you to go through a simulator or a comparator to determine whether the loan in fine could be advantageous to you or not.
To have access to his first residence even one with a modest income, there are many possible financing options to make his real estate project a reality. Discover the different real estate loans available.