Banks offer different types of photo credit: Minerva Studio / Shutterstock / Minerva Studio
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Banks offer different types of credit, whether it is to finance a real estate purchase, a rental investment, a personal project or even consumer spending. This diversified offer allows you to select a loan according to your profile and your needs.
Summary:
- Depreciable credit for real estate or consumption
- Progressive fixed rate credit to borrow more
- Credit in fine for rental investment
- Revolving credit to have a reserve of money
- Flexible credit to adapt your repayments
- Bridge credit while waiting for the sale of your main residence
Depreciable credit for real estate or consumption
This is the most common form of credit. At each maturity, you repay both interest and part of the borrowed capital. However, the share of interest in repayments is greater at the start of the loan. It decreases over time as the amount of principal repaid increases. The depreciable credit can relate to a real estate purchase or to the financing of a project. It is opposed to credit in fine.
To know
A depreciable credit can be at a fixed rate or at a variable or revisable rate.
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Progressive fixed rate credit to borrow more
With progressive fixed rate credit or progressive maturities, repayments increase by a certain percentage each year. In general, the increase in monthly payments is about 1% per year. The borrower’s debt ratio being calculated in relation to the first monthly payment, this type of credit makes it possible to borrow more than with a depreciable credit. It is suitable for borrowers with potential to increase their income or good visibility (young executives, civil servants, etc.).
Credit in fine for rental investment
During a loan in fine, the monthly payments relate only to the interests. Thus, the capital is not reimbursed, in full, until the last installment. The loan ultimately being more risky for the banks, they ask for additional guarantees for this type of credit (pledging of a life insurance contract, mortgage of real estate).
The loan in fine is particularly suitable for a rental investment. Indeed, the monthly payments are constant and lower than for a depreciable credit. In addition, interest is deducted from rental income, which reduces the taxation of rental investment.
Revolving credit to have a reserve of money
By taking out revolving credit, you get a line of credit that you can tap into when needed. The amount of this money reserve is specified in the loan contract. A revolving credit can be associated with a credit card. Each repayment relates to both interest and principal. The revolving credit can be terminated at any time, subject to reimbursement of the sums due.
A noter
The interest rates of revolving loans are higher than those of traditional personal loans.
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Flexible credit to adapt your repayments
This type of loan allows you to increase or reduce the amount of your monthly repayments, to suspend them or to make an early repayment. The advantage of flexible credit is to adapt your repayments to your income. Most mortgage loans are more or less flexible.
Bridge credit while waiting for the sale of your main residence
This credit is granted to finance the acquisition of a new home when the old one has not yet been sold. This is a bridging loan whose term is supposed to be very short (a few weeks or months). It ends with the sale of the old accommodation. Beyond two years, the bank can demand repayment. She may ask you to lower the sale price.
The different forms of credit are numerous and meet generic needs. However, some will be more suited to your personal situation than others.
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