Interim interest
Interest charged on amounts progressively disbursed during a VEFA or construction financing, before the loan enters its normal amortization phase. During this pre-financing period the borrower pays only interest (and insurance) on disbursed funds, which can create several months of double cost alongside a remaining rent.
Key points
- Calculated only on amounts already disbursed, not on the total loan capital.
- Accumulate over the entire construction period, often 12 to 24 months.
- Can coincide with a remaining rent, increasing monthly charges significantly.
- Their total amount must be included in the APR and the loan offer.
Frequently asked questions
How are interim interest charges calculated on a VEFA loan?
After each disbursement, the bank applies the nominal loan rate to the total cumulative capital released. For instance, if €50,000 has been disbursed at a 3.5% rate, the monthly interim interest is approximately €146. This amount grows with each new tranche and stops at delivery, when normal amortization begins.
Can interim interest be avoided or reduced on a VEFA purchase?
They cannot be fully avoided, but the borrower can reduce the amount by applying personal savings to the first tranches. Some banks also offer a full deferral of both amortization and interest payment until delivery, which simplifies cash-flow management but does not eliminate the cost, which is simply capitalised.
Why must the broker include interim interest in their debt-ratio analysis?
During construction the borrower bears interim interest and, often, rent. If these combined charges exceed HCSF thresholds, the file may be declined even if future monthly payments are manageable. The broker must therefore model peak charges during construction to confirm the profile remains bankable throughout.
In practice
On a €200,000 loan at 3.6%, interim interest on a €70,000 tranche (35% foundations stage) amounts to around €210 per month; if the borrower still pays €900 in rent, their temporary monthly charge exceeds €1,100 before actual repayment even begins.
Official sources
- Getting a mortgage (fund release and intercalary interest) · Service-Public.gouv.fr
- Mortgage credit (official guide) · Service-Public.gouv.fr