The formula that makes it possible to repay a loan in fine is particularly easy to assimilate even for a neophite to the extent that unlike a depreciable loan, interest and capital are completely dissociated .
When you buy a loan in fine, you repay your debt to the bank as follows:
The difficulty lies mainly in the calculation of the amount to be pledged as collateral . For this, it simulates the progression of a capital placed over the duration of the loan. In reality, nothing is easier. With our simulation tools and our numerical examples, you will be able to do it easily.
To find out how capital is amortized in a classic loan: see here
Simple example of a refund
We approach the simplest calculations:
Example data : An investor buys an apartment worth € 150,000. It is assumed that it finances by its own means the additional costs, ie notary fees, guarantee (mortgage, lien money lenders or mutual guarantee). It therefore borrows € 150,000 over 20 years (the maximum period often allowed by banks for loans intended for rental investment) at a rate of 2.95% (average rates in June 2013).
The calculation of the monthly payment
Nothing is easier at this level. First of all, the annual rate of 2.95% on the borrowed capital is applied as follows:
150000 * 2.95% = 4425
This amount corresponds to the annual interest that you will pay to the lender. Then, divide by 12 to find the monthly payment.
4425/12 = 368.75 €
By way of comparison, for a classic amortising loan and for the same rate and duration conditions, it would have been necessary to repay each month: € 828.
Return of capital
Nothing simpler here too since you always have the 150 000 € that you borrowed, the capital has not been amortized.
How much does it take to pay back the loan?
You will have to back an investment contract to your loan in fine to guarantee its repayment. The interest of such a mechanism in addition to the tax optimization that allows investors to deduct more interest is due to the fact that the amount pledged is less than the capital borrowed.
We will continue the analysis by calculating the sum to be placed on the following three durations: 10, 15 and 20 years. For that we will proceed to a simulation based on an assumption of return as the bank would do. In general, funds must be invested in secure funds. The lender will not take the risk of letting you invest the funds in the stock markets. We are therefore assuming a net rate of 3% .
- You can use our calculator to simulate the progression of a capital placed
- Another tool to determine the amount to borrow based on the monthly payment.
Simulation over 10, 15 and 20 years
It is interesting to compare this calculation of the cost of credit since it will be all the more important as the duration will be long. You can also calculate the actual impact using our tool to compare an investment and a loan.
The choice of the duration depends very directly on the situation and the objectives of each one. If you invest in a rental transaction, for example to benefit from the Loi Duflot, it may be wise to match the duration of the loan with that of the device that provides that the property must be rented for a minimum of 9 years .
If your investment is intended to increase your income when you retire , it is better to opt for a long term (maximum 20 years).
Other simulators at your disposal
- To calculate the cost of a loan: calculation tool
- To know how much the notary fees are back to you: calculator notary fees
- To know the monthly payment of a loan: simulation tool of maturity calculation
- To determine the indebtedness of a rental investment: calculator of calculation of ratios
- To find out how much you can borrow: calculator in three clicks