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Interest-only loan simulator: interest, cost and leverage
With a bullet loan, you repay only the interest for the whole term, then the principal in a single payment at maturity. More expensive in gross interest than an amortising loan, it offers in return interest that is fully deductible from property income, and capital that remains invested and keeps working.
You pay only the interest for the whole term of the loan
Against property income, which cancels out part of your tax on rents
Often on an assurance-vie pledged as collateral, working in parallel
The simulator
Simulate your bullet loan
The simulator calculates the monthly interest payment and the total cost. Your data is neither stored nor transmitted.
Bullet loan simulator
Calculate the interest on an interest-only loan, where the capital is repaid in one go at maturity.
Indicative calculation, based on 2026 rules and the assumptions entered above.
Why
Why the gross interest cost of an interest-only loan is misleading
Presented gross, the bullet loan looks like the loser: since the principal never falls before maturity, interest is charged on the full amount borrowed for the whole term. The interest cost is therefore mechanically higher than on an amortising loan, where the principal — and so the interest base — falls month after month. A borrower who stops at this figure will wrongly conclude that the bullet loan costs more.
This reasoning ignores the two drivers that make the bullet loan an optimisation tool. First, the interest is fully deductible from property income: the higher your marginal tax rate, the larger the real share of that interest the State bears through the saving on property income tax. The net cost after tax bears no relation to the gross cost displayed.
Second, the principal you do not repay month after month remains invested — typically in an assurance-vie pledged as collateral for the loan — and keeps growing throughout the term. The right indicator is therefore never the interest cost in isolation, but the overall net return of the strategy: interest paid, minus the tax saving, minus the performance of the capital that remains invested. That balance is what a bullet loan should be judged on.
What the calculation shows
The levers a bullet loan opens up
Interest on a bullet loan is fully deductible from your property income. Since the monthly payment contains only interest — and never any principal — the deductible portion is at its maximum throughout the term, whereas on an amortising loan the deductible interest shrinks year after year. For a heavily taxed investor with property income to offset, this mechanism substantially reduces property income tax and radically changes the net cost of financing.
You do not repay the principal before maturity: it remains available and invested, most often in an assurance-vie pledged as collateral for the loan. This capital grows throughout the term of the loan, creating a double leverage effect — you own the financed asset while keeping a portfolio that works in parallel. No amortising loan allows this: it consumes your monthly savings solely to extinguish the debt.
A bullet loan only makes sense if repayment of the principal at maturity is planned for and secured: dedicated savings, a pledged assurance-vie, a planned sale. Misused — with no repayment savings built up, or by a lightly taxed borrower who gets no benefit from deductibility — it becomes a bad calculation, more expensive than an amortising loan with no tax offset. It is a strategic tool, not a convenience loan: setting it up calls for a properly constructed wealth structure.
Case study
Case study: Karim, 52, rental investor in Aix-en-Provence
Karim, heavily taxed (41% marginal tax rate) and already receiving property income, is financing a €300,000 rental investment over 15 years at 3.5%. He compares a standard amortising loan with a bullet loan, the capital being pledged on an assurance-vie. Here is how the simulator reads:
| Indicator | Amortising | Bullet | What it means |
|---|---|---|---|
| Monthly payment (excluding insurance) | ≈ €2,145 | ≈ €875 (interest) | easier on cash flow |
| Gross interest cost | ≈ €86,000 | ≈ €157,500 | bullet loan costs more, gross |
| Tax saving (deductible interest) | ≈ €35,000 | ≈ €64,500 | maximum deduction |
| Interest cost net of tax | ≈ €51,000 | ≈ €93,000 | to be weighed against the capital invested |
The gross interest cost of the bullet loan is almost double that of the amortising loan — and that is precisely the misleading figure. Once deductibility is taken into account, the gap narrows; above all, Karim's capital, still invested in his pledged assurance-vie, grows for 15 years. If that capital earns more than the net additional interest cost, the bullet loan comes out ahead.
Everything rests on two conditions: real property income tax to offset, and secured repayment capital at maturity. When both are met, the bullet loan maximises leverage; when they are absent, it becomes the wrong choice. This is precisely the trade-off an adviser settles before the structure is set up.
In practice
A bullet loan is judged on overall net return, not on interest
This simulator calculates your monthly interest payment and the gross cost of the loan. The decision is made elsewhere: on actual deductibility given your property income and marginal tax rate, on the expected performance of the capital that remains invested, and on securing the final repayment. The same rental investment financed with an amortising loan or a bullet loan produces very different net results.
Balmont Conseil is a wealth management advisory firm based in Lyon, a member of ANACOFI-CIF, with no capital ties to any bank. Open architecture allows us to study the appropriate financing — repayment, interest-only or Lombard depending on your objective — and to select the backing contract in your interest, before putting you in touch with our partner banks. Let's book an appointment to model the overall net return on your project.
Frequently asked questions
What clients ask us.
Does a bullet loan really cost more?
In gross interest, yes: since the principal is never repaid before maturity, interest is charged on the full amount borrowed for the whole term. But this gross calculation is misleading for an investor. The interest is fully deductible from property income, and the unrepaid principal remains invested and keeps growing. The right indicator is the overall net return of the strategy — interest net of tax against the performance of the capital — not the interest cost in isolation.
Who is a bullet loan for?
Investors who already have capital — pledged as collateral — and property income to offset for tax purposes, with a high marginal tax rate. It is for this profile that interest deductibility and preservation of the invested capital have their full effect. Conversely, for a lightly taxed borrower or one with no repayment savings built up, the bullet loan becomes a bad calculation: it costs more with nothing in return.
Why pledge an assurance-vie as collateral?
The principal you do not repay month after month must be used to settle the loan at maturity. Placing it in an assurance-vie pledged to the bank serves two purposes: securing that final repayment while letting the capital grow throughout the term of the loan. The contract works in parallel with the financed investment, which creates the leverage effect specific to the bullet loan. This is the classic structure, but calibrating it warrants advice.
What happens when the loan reaches maturity?
The borrowed capital is repaid in a single lump sum, either from dedicated savings—often a pledged assurance-vie policy—or from a planned sale. This is the key point to be aware of with a bullet loan: this repayment must be anticipated and secured from the outset. A well-structured loan precisely defines the source of the final repayment; an improvised one risks having to sell urgently at maturity.
What does Balmont Conseil bring compared with my bank?
Balmont Conseil is a wealth management advisory firm based in Lyon, a member of ANACOFI-CIF, with no capital ties to any bank. An interest-only structure combines a loan, property-income taxation and a backing contract: we model the overall net return and select the backing contract from among our partners, in your interest. A bank sells its own loan and in-house contract; we study the structure suited to your wealth, then put you in touch with our partner banks.
