Published on : 29 November 20213 min reading time
Henceforth, going into the holiday rental investment becomes a lucrative solution. However, the owner must find a good financing before he/she can welcome his/her first tenant in his/her house or apartment. Before you start thinking about investing in rental real estate, we recommend you have an estimate on current rental prices by checking ads and offers at for-sale.com for a start!
The bank and the savings bank: a common solution
Getting a loan from the bank is one of the solutions to finance the rental investment. Indeed, most homeowners do not have the financial means to buy an apartment. They are forced to resort to their banker to ask for their financial capacities. The purpose of this interview is to know the possibilities in the short or medium term to realize a real estate project and to know if they can engage in a loan. The borrower can give the benefit of the lending bank a real estate mortgage on his house. From this moment on, this debtor gives the real right as security to his creditor on his property. The bank has the authorization to sell his apartment if he will not pay his repayments. But, if the bank refuses to help you, you can draw a sum of money from your savings bank when you think about getting into a seasonal rental.
Some practical solutions to finance a holiday rental project
Applying to a real estate broker is another option that many homeowners choose to finance their rental project. In most cases, this professional can look for a loan at a better rate than the one offered by the bank. In addition, if you do not want to use a broker, you can borrow from an individual under specific conditions. This gives you the opportunity to buy a flat and rent it later. Also, it is possible to benefit from the help of some organizations for a renovation of the heritage.
A classic amortizable credit or credit in fine?
You want to lend money to the bank for this reason that you cannot afford to buy a house and rent it later. You must choose between two types of credit. In general, the majority of real estate loans given by banks are called amortizable. For this credit, the repayment of capital is spread over time. Each month, debtors must repay the principal and interest at the same time. Interest is deductible from their rental income but the amount decreases over the years. For the credit in fine, they only repay the interest throughout its duration. The capital is repaid in one go and this is at the end of the loan. Interest is often higher than that of a depreciable loan, but it is also deductible from their income. Only an owner can seek help from the bank with the proviso that he is able to repay capital.