Working out your loan repayment period before investing in new property
Planning to invest in new-build property to rent? The period over which you repay your property loan is one of the key factors governing the success of your investment. So use our calculator to simulate your borrowings over different repayment periods and compare the resulting amortization tables.
Extending the property loan repayment period allows you to borrow more or reduce your monthly repayments. On the other hand, it does increase your overall borrowing cost.
If you decide to claim tax reductions under the Robien or Borloo schemes, you can reduce your loan repayment period accordingly to 9, 12 or 15 years. This will clearly increase your monthly repayments. Under these schemes, you can deduct the loan interest from your taxable (rental) income, which will have the effect of increasing your déficit foncier (property loss). You then pay even less tax!
The amortization table gives you an overview of your monthly repayments over the full repayment period of your loan. For each monthly repayment, the table shows you:
Extending the property loan repayment period allows you to borrow more or reduce your monthly repayments. On the other hand, it does increase your overall borrowing cost.
If you decide to claim tax reductions under the Robien or Borloo schemes, you can reduce your loan repayment period accordingly to 9, 12 or 15 years. This will clearly increase your monthly repayments. Under these schemes, you can deduct the loan interest from your taxable (rental) income, which will have the effect of increasing your déficit foncier (property loss). You then pay even less tax!
The amortization table gives you an overview of your monthly repayments over the full repayment period of your loan. For each monthly repayment, the table shows you:
- the proportion allocated to repayment of capital, which increases with time,
- the proportion used to pay the interest element, which gradually reduces.