Pillar 10 · Leverage
Financing your wealth without eating into your savings
A well-structured loan is not a burden, it is an asset. Real estate leverage, lombard lending, interest-only loans (prêt in fine): used with method, credit lets you build wealth far beyond what savings alone would allow.
Maximum debt ratio
35% (+20% exemption)
Lombard: usual loan-to-value
50 to 70%
In fine: deductible interest
100%
Borrower's insurance cost
0.10 to 0.50%/year
§ 01
Financing 100 to 110% of a property's price with only a 10 to 30% down payment multiplies your ultimate wealth. Over 20 years, a property bought with a 20% down payment and self-financed by rent can translate into a mortgage-free asset worth 4 to 5 times the initial down payment, in nominal terms, before tax.
§ 02
A loan secured against a financial portfolio (assurance-vie, a securities account, a Luxembourg contract). You borrow 50 to 70% of the portfolio's value without liquidating it. Ideal for seizing an opportunity without triggering tax, or for investing in real estate without tapping into your savings. Caution: the portfolio needs to be able to absorb a margin call without drama.
§ 03
Only the interest is repaid during the term, with the capital repaid at maturity (often through a linked assurance-vie policy). Interest is higher than on a standard repayment loan, but it is deductible from property income, so the net outcome can be very favourable at a high TMI.
§ 04
The TAEG (APR) alone is not enough. The questions that really matter: term, adjustability, flexibility for early repayment (are prepayment penalties capped?), portability, and borrower's insurance. Over 20 years, thorough overall negotiation is often worth €30k to €60k.
§ 05
The HCSF's 35% debt-to-income rule is a theoretical ceiling. Wealth-building profiles can go beyond it through the 20% exemption granted to banks, or through dedicated structures (private banking, lombard lending, tailored estate-planning arrangements). Well-informed advice can sometimes unlock €200k to €500k of extra borrowing capacity.
Frequently asked questions
Not always. As long as the loan rate is lower than the expected net return on investment, keeping the loan and investing the cash is more profitable. The calculation needs to account for the tax treatment on both sides.
Start together
Let's talk it through directly. First conversation offered, with no commitment.
Or receive The Oak Letter every month.
Your messages are only used to reply to you. For advice tailored to your situation, nothing beats a real conversation with Camil.
