Simulation of an housing loan to acquire a real estate property under the freehold leaseback scheme.
Example: someone gets a monthly income of Euro 5.000 (ie. Euro 60.000 yearly). He has no debts. His/her available cash is Euro 50.000.
- Either to prepare his retirement
- Or to increase his personal assets without too much financial burden
- Or both…
Over a 15 year reimbursement period, with a repayable housing loan at 3% interest rate, the borrower can acquire a property worth Euro 246.743. The housing loan amount will be Euro 204.755. Monthly loan repayments will be Euro 1.500. Meanwhile, he/she will receive a guaranteed rental income of 4% on his real estate investment, ie Euro 822.47 /month (ie. 246.743 x 4%/12).
- Acquisition amount: Euro 246.743
- Repayable housing loan: Euro 204.755 (at 3% interest rate)
- Available cash: Euro 50.000
- Monthly loan repayment: Euro 1.500
- Monthly rental income: Euro 822.47 at 4% interest rate)
- Net monthly outflow: Euro 677.53 ( ie. 1.500 – 822.47)
- Total paid amount: Euro 121.955 ( ie. 677.53 x 180) for an acquisition value of Euro 246.743
- Moreover, the rental amount is indexed while the loan repayments are fixed, therefore the monthly outflow decreases every year.
- Notary fees for the acquisition of a newly built property in France is about 3%.
- At maturity of the housing loan, the investor can keep his property and cash the rental income, uses his property for himself or sell it.
- Bank can lend up to 85% of acquisition cost (repayable housing loan) or 75% of acquisition cost (bullet loan).
- If a Belgian based resident wishes to acquire a property in France, bank will take a charge (mortgage, hypotheque) on the French property and not on a Belgian real estate asset.