Loan Architecture
Adjust Parameters
$350,000
$50k
$750k
$1.5M
6.50%
3.0%
7.0%
11.0%
3.50%
1.0%
AFR Guideline ~3.5-4.5%
9.0%
30 Years
5 Yrs
15 Yrs
30 Yrs
Tax & Legal Compliance Tip: To prevent the IRS from classifying an intra-family mortgage as a taxable gift, family interest must generally equal or exceed the applicable Federal Mid-Term or Long-Term AFR (Applicable Federal Rate) in effect when the loan is executed.
Commercial Bank
$2,212.46
Monthly payment at 6.5%
Family Bank
$1,571.66
Monthly payment at 3.5%
Child's Monthly Savings
$640.80
Extra cash flow in pocket every month
Interest Retained vs. Sunk Bank Cost
Full Term Horizon
Commercial Mortgage Third-Party Bank
Principal Repaid:
$350,000.00
Interest Sunk to Bank:
$446,485.60
Total Outlay:
$796,485.60
Family Bank Model Kept in Family
Principal Repaid:
$350,000.00
Interest Paid to Parents:
$215,797.60
Total Outlay:
$565,797.60
Total Generational Wealth Preserved
Difference in total interest paid across full term
$230,688.00
Amortization Balance Paydown Trajectory
Remaining Balance ($) vs. Loan Years
| Year / Month | Payment | Principal | Family Interest | Remaining Balance | Cumulative Interest |
|---|