Are you looking for financing but are you hesitating between a loan in fine or a loan repayable? What are the differences, advantages and disadvantages of these two main types of mounting? How do they work? How is the distribution of interest, capital and insurance distributed? The Credither Guide gives you all the keys to understand the principle of these loans and make the right choice to finance your purchase!
The depreciable loan
The majority of mortgages are amortizable loans, ie loans with constant maturities spread over time. During the repayment period, you repay both principal and interest. The interest portion decreases over time, however.
This type of loan applies in particular in the case of the acquisition of a principal residence.
The credit in fine
Some borrowers may prefer to repay a loan in fine, especially buyers wishing to rent their property. The principle ? Your monthly payments consist only of interest, the capital is refunded at the end of the loan at one time. For that, you make yourself a savings. Payments are made in an investment, usually life insurance.
The advantage of credit in fine is that interest is deductible from your property income. The disadvantage is that the cost of credit is higher than that of a depreciable loan. Interest is in fact calculated on the borrowed capital, and not on the capital remaining to be repaid as for the depreciable credit.
How to choose between the depreciable loan and the credit in fine?
It all depends on your file, and especially your income. Credit in fine can be an interesting solution for borrowers with large incomes, and therefore subject to significant taxation (those whose marginal tax bracket is greater than 30%).
If you rent your property, loan interest is deductible from your property income (rents), and therefore from your income tax. In short, the more interest you have, the more you have a deficit, and the more your tax deduction increases.