Repayment rate

The repayment rate is the amount you pay back to the bank on a regular basis to pay off the loan over the fixed term of your construction loan. This monthly repayment usually includes both the repayment of the loan and the interest. The exact amount of the repayment installment depends on various factors, including the amount borrowed, the interest rate, the term of the loan and the chosen repayment method.
There are different types of repayment installments in construction financing:

1. annuity loan:

With an annuity loan, the monthly installment remains constant over the entire term. This installment is made up of an interest component and a repayment component. As the interest component is higher at the beginning, the repayment component decreases over time.

2. amortizing loan:

With an amortizing loan, the amount of the repayment remains constant during the term. However, as the interest relates to the remaining loan amount, the total monthly repayment amount decreases over time.

3. bullet loan:

With a bullet loan, you only pay the interest during the term. Repayment is made at the end of the term in a single payment. This model is used less frequently in construction financing.