In fine is a Latin expression that means “at the end”. A credit in fine is a loan whose borrowed capital is to be repaid in full at one time. Only interest is to be repaid monthly throughout the credit. This type of credit is offered to individuals wishing to finance a rental investment.
They benefit from a tax benefit and can deduct the interest paid from their rental income.
More on In fine
The credit in fine is a real estate loan whose only interest is to be repaid during the whole duration of the credit. The entire borrowed capital is then repaid at the end of the loan. It is thus necessary for the borrower to build up savings in order to place, in monthly installments or at one time, the amount to repay at the end of the loan. Most often, this investment is made on life insurance.
Credit in fine has been put in place to offer a tax benefit to rental investors. It is advantageous for individuals or SCI (Civil Companies Real Estate) being heavily taxed and receiving income property. Indeed, it is possible for them to deduct credit interest from their rental income. Thus, the higher the interest paid, the higher the deduction. For a loan in fine, the capital is not amortized, the interest is maintained at a high level throughout the credit because their calculation is made on the basis of the capital remaining due, it being refunded in one deadline end of loan.
The main disadvantage of a loan in fine is that it has a higher rate than a depreciable real estate loan. The advantages of the loan in fine are:
- High interest rates and non-declining interest allow a large tax deduction
- Credit overhead generally offset by savings rate of return (life insurance)
- Diversifies your wealth: real estate investment and financial investment
- The borrower insurance reimbursing the credit in the event of death or disability, your heirs benefit from the property financed but also from your investment because the capital will have been reimbursed to the bank by the insurance.
The word of the broker
You can choose the loan insurance that guarantees your loan in fine: compare the offers of insurers with the proposal of the bank and opt for the cheapest contract that will allow you to save on the cost of your home loan .