Structuring the total project cost
Separate price, acquisition costs to be quantified, works, equipment, financing costs, insurance and cash reserves. Identify stated deposit and available deposit, then the envisaged credit amount. A client budget envelope does not constitute a bank decision. The bank examines the situation and confirms its terms; no universal debt-to-income ratio is promised here. To compare offers, request the financed amount, duration, interest rate type, monthly repayments, insurance cost, fees and early repayment conditions. The nominal rate does not reflect the total cost. Participatory financing offers have their own structure: do not automatically describe them using only the conventions of a classic amortisable loan.
Fictional example
Fictional project: 1 000 000 MAD price and 100 000 in additional line items, for 300 000 deposit. The theoretical requirement is 800 000, subject to costing and bank approval.
Financing starts with the project line items.
Understanding the amortisable calculation
For an amortisable loan with constant monthly repayments, excluding fees and insurance, the theoretical monthly instalment is P × i / (1 − (1 + i) power −n), where P is the capital, i the monthly rate and n the number of monthly repayments. At a zero rate, it equals P / n. If the provided rate is a nominal annual rate under a simple monthly convention, i corresponds to this rate divided by twelve; another convention requires a different conversion. Each month, interest = remaining principal × i; principal repaid = monthly instalment − interest. Initially, the interest portion is larger. The resource simulator applies precisely these assumptions, excluding fees and insurance and without reproducing a bank offer.
Fictional example
800 000 MAD, 5% nominal annual rate, 240 months: approximately 5 279.65 MAD per month. In the first month, approximately 3 333.33 interest and 1 946.32 capital, before bank rounding.
Always display conventions, exclusions and units.
Comparing and testing sustainability
A longer term generally reduces the monthly repayment for the same loan at a given rate, but increases the model's total interest. Therefore, compare monthly repayment, total cost and contract flexibility. Add other project expenses to your budget, then test different income or expenditure scenarios without concluding eligibility. A buy-to-let simulation after debt must distinguish income, charges, taxation and repayment. For an MRE (Moroccans Residing Abroad) file, foreign exchange and fund origin questions apply depending on the situation. Document each assumption and request written confirmation of the bank offer before presenting it as confirmed. The result of the calculation is educational, not a financing approval.
Fictional example
A lower monthly repayment over twenty-five years may seem attractive, but the comparison remains incomplete without the total amount repaid, insurance, fees and offer conditions.
A low monthly instalment on its own is not necessarily better financing.
Your practical application work
A fictional project requires 800 000 MAD of borrowing. Compare a 15-year scenario and a 20-year scenario at 5% nominal annual rate, excluding fees and insurance.
- Budget line items and exclusions
- Your results and how duration changes them
- Questions to be confirmed by the bank
Sources and benchmarks
- Bank Al-Maghrib · Interest on credit operationsReference source for the topic. Scenarios, working methods and durations are educational constructs created by CBE; the source does not certify them.