Real estate bank credit: loan in fine, amortizable, modular, progressive


Freely set by the credit institution, bank credits vary from one bank to another. They are flexible according to your situation and your negotiation with your loan shark. Bank credit consists of several data: the capital borrowed, the interest rate granted, the duration of the loan, the amount of the monthly payment. 

 

The amortizable loan

amortizable loan

The most popular form of credit is the depreciable loan. It is a form of loan where the loan (principal + interest) is repaid progressively, in the form of monthly payments.

Most amortizable loans allow you to repay your loan in equivalent monthly installments (this is called a loan with constant maturity. At the start of repayment, you repay more interest than capital, then the capital becomes the majority.

 

The loan in fine

The loan in fine

Principle

The loan ultimately consists in repaying, during the term of the loan, only the interest. You do not repay the capital until the maturity of the credit is reached.
During the term of the loan, you build up savings. This will grow during the term of the loan while being fed by regular monthly payments. At the end of the loan, its balance will be used to repay the loaned capital. Your credit institution thus has a guarantee, in addition to those usually requested (disability-death insurance, etc.)
The features of this loan are:

  • A minimum value of $ 21,500, and no maximum value
  • A loan period between 3 and 15 years

Advantages and disadvantages of credit in fine

The main advantage of the loan ultimately is from a tax point of view: you can deduct loan interest from rental income and reduce its taxation.
The downside is its relatively high rates compared to other loans.

 

The progressive or declining loan

declining loan

The progressive loan is a repayable loan, the monthly payments of which increase at a defined rate with your banker.
Conversely, the declining loan sees its monthly payments decrease at a regular rate defined with your banker.

Advice

Use the progressive loan when you plan to increase your resources in the years to come. It will allow you to manage your mortgage smoothly.

 

Landing loan, or smoothed loan

Landing loan, or smoothed loan

Principle

The landing loan adapts to your repayments. If you have several mortgage loans, it allows you to pay only one single monthly payment, by adapting to your other monthly payments. It will vary depending on the other loans you have to repay.

Example

Monsieur and Madame Dupont have taken out three loans:

  • A zero-rate loan of $ 20,000 for 3 years;
  • A home savings loan of 60,000 for 10 years, at 3%;
  • A loan to compensate for $ 150,000 for 15 years, up to 6%.

Having chosen the loan to be compensated, they will pay a constant monthly payment, which will amount to:

Year

Zero rate loan

Home savings loan

Ready to compensate

Total monthly payment

From 1st to 3rd year

533.33

515

733

1805

From 4th to 10th year

515

1290

1805

From 11th to 15th year

1805

1805

Total cost

     

243,930

Advantages and disadvantages of tiered loan

The main advantage is to group your monthly payments into a single monthly payment, which does not vary throughout the duration of your loan. So, you can use several credits with this trick, while a conventional credit financing plan would probably have offered you too high monthly payments at the start of the loan.
The main drawback is the cost of credit, which is higher than for conventional credit.