What is a bullet loan ?

Repayment of the principal in a single lump sum at maturity

A loan is described as ‘bullet’ when the principal is repaid in full in a single lump sum on the loan’s maturity date. Interest, on the other hand, may be paid in various ways: as a single lump sum at maturity, or in instalments (annually, for example) throughout the term of the loan.

Example

Let’s take the example of an investor who lends €1,000 to a property developer on a bullet loan basis, at an annual interest rate of 10 per cent over a term of 24 months, with interest paid annually. The developer will then have to pay:

• At the end of the first year: €100 in interest; the principal has not yet been repaid
• At the end of the second year: €1,100 in total, comprising €1,000 of principal repaid in full + €100 in interest

In total, the investor does indeed recover their €1,000 principal, plus €200 in interest over the two years.

Why this matters to the investor

With a bullet loan, the principal remains fully exposed to the risk of default until the final maturity date, unlike an amortising loan, where the outstanding principal (and therefore the risk) gradually decreases as repayments are made. This is the most common structure in property crowdfunding, particularly because it aligns with the cash flow patterns of operators: they generally only have access to cash when the property is resold, at the end of the transaction.

Updated on: 17/09/2026