Simulation of an housing loan to acquire a real estate property under the freehold leaseback scheme.
Example: someone gets a monthly income of Eur. 5,000 (ie. Eur. 60,000 yearly). He has no debts. His available cash is Eur. 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 Eur. 246,743. The housing loan amount will be Eur. 204,755. Monthly loan repayments will be Eur. 1,500.
Meanwhile, he will receive a guaranteed rental income of 4% on his real estate investment, ie Eur. 822.47 /month (ie. 246,743 x 4% /12).
- Acquisition amount: Eur. 246,743
- Repayable housing loan: Eur. 204,755 (at 3% interest rate)
- Available cash: Eur. 50,000
- Monthly loan repayment: Eur. 1,500
- Monthly rental income: Eur. 822.47 at 4% interest rate)
- Net monthly outflow: Eur. 677.53 ( ie. 1,500 – 822.47)
- Total paid amount: Eur. 121,955 ( ie. 677.53 x 180) for an acquisition value of Eur.
- 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.