Bullet loan calculator

How does an endfälliges Darlehen (bullet loan) work?

With an endfälliges Darlehen (bullet loan) you pay interest only during the term: loan amount × interest rate ÷ 12 per month. The debt does not fall. At the end of the fixed-rate period the whole loan amount falls due at once.

On €100,000 at 4% that is €333.33 a month. The calculator shows this interest payment, the total interest over the fixed-rate period and the balloon payment at the end.

As remaining debt after the fixed period it reports €0, because the balloon payment counts as made in the last month.

Is a bullet loan more expensive than an annuity loan?

Yes, at the same interest rate you pay more interest, because you pay interest on the full loan amount every month. Over ten years the example comes to €40,000 instead of €35,458.37 for an annuity loan with 2% repayment, so €4,541.63 more.

In return the monthly burden is lower: €333.33 instead of €500. At the end, though, you owe €100,000 instead of €75,458.37.

Over ten years €60,000 goes to the bank with the annuity loan and €40,000 with the bullet loan. That €20,000 plus the extra interest is the higher debt at the end.

If the bank charges a higher rate for the bullet loan, the gap widens. In that case enter the rate you were offered.

When is a bullet loan worth it?

When you can be sure of making the final repayment from another source, such as the sale of the property or an asset that matures. Typical uses are short bridging loans and projects where the property is sold after refurbishment.

For rented property, loan interest is deductible as Werbungskosten (income-related expenses, § 9 Abs. 1 Satz 3 Nr. 1 EStG, the Income Tax Act). Because the debt does not fall, the deductible interest stays the same over the term. You still pay the interest, and the tax saving covers only part of it.

The risk sits at the end: if the money for the balloon payment is not there, you need follow-up financing for the full amount.