To complete the construction of a furnished real estate transaction, you must consent to a monthly savings effort, a certain amount of money that you will spend on this investment.
It is a matter of determining the right amount corresponding to your situation. To finance a real estate investment you must take into account:
– all household income (wages, possible income from land, etc.)
– your expenses
– your charges …
If possible, also consider the factors that will change your family or tax situation in the coming years.
Ex: expenses related to the studies of children, child who soon would not be your responsibility …
It’s always better to think about these things than having to deal with them in a critical moment. Then there are several other very important questions for which we will give you very precise answers.
What type of loan to choose to invest?
Basically, for financing, two solutions are available to you:
- The depreciable loan
- In Fine Loan
THE IMPORTING LOAN TO INVEST
Investing in real estate with a depreciable loan requires observing different characteristics. Fixed rate ? Flexible fixed rate? Revisable rate? Let’s see what’s behind these terms.
The fixed rate solution is the most secure. As its name indicates, you know from the signature all the terms of repayment of your loan. You do not experience any fluctuations in the financial markets. No surprises are possible.
For a flexible fixed rate loan, it’s a bit more complex. You have the possibility for the duration of the loan to increase or decrease the amount of your monthly payments, which consequently leads to a variation in the repayment period. Depending on the institution, the amplitude of the modulations is between +/- 10% and +/- 30% per year.
It’s the assurance of more freedom. You can decide on any change depending on whether your income goes up or down.
Finally with a variable rate or called revisable , it’s kind of the game of poker. This is a solution that can save you a lot or on the contrary make you lose. The subscribed loan has a rate significantly lower than a fixed rate. However, a floating rate is a rate that varies according to a benchmark, usually Euribor. It can vary upwards or downwards. So you can end up with a duration or a cost of credit that explodes …
In the end, depending on your sensitivity to risk, or your desire for optimal performance, you must think carefully before making your choice and do not hesitate to follow the advice of a professional, who will guide you to the best solution for your project and your profile.
LOAN IN FINE TO INVEST
The loan “in fine” is generally suitable for heavily taxed investors wishing to invest in real estate to reduce their taxes through the law Pinel for example. The principle is that this loan is linked to financial support ( life insurance for example).
During the term of the loan, the investor only pays the loan interest. The capital is therefore not depreciated. It will be refunded, at the end of the credit, using savings capitalized on life insurance.
Monthly payments, consisting solely of loan interest, are fully deductible from property income, which contributes to optimizing tax exemption. The interest is there and only tax.
By observing the operation of a tax exemption operation , we note that interest is taken into account in the calculation of a potential property deficit. As a result, the more interest you have in borrowing the more you have a property deficit … and so the more you earn in tax reduction.
Here again, the advice of a wealth management expert will be most useful to know whether or not, for the financing of your operation, you can claim this kind of loan and especially if it is adapted to your profile .