The decision to buy a house goes hand in hand with the need to precisely define your real purchase potential, establishing the monthly payment that you can and will have to pay to pay the amount of the property.
What the Facts Show You
In fact, you will need not only to know if the expense will be accessible to you in the long term, but also to know the parameters that banks take into consideration to determine whether or not to approve the loan.
Below we will show you what are the variables that come into play in this operation and you will find out in detail how the mortgage payment is calculated.
All the methods of calculating the mortgage payment
The calculation formula for the mortgage payment consists of several items that affect the amount that you will have to pay each month to buy your property: knowing how to estimate the value of each of them will allow you to establish your monthly payment. In case of estimate tax refund this is important now.
The first variable to know is the value of the property, i.e. its sale price, which is equivalent to the cost per square meter multiplied by the total square meters. In addition to the square footage, other details affect the price such as:
- The conditions of the apartment
- The number of rooms
- The energy class
- The type of heating
- The presence of the lift and any open spaces.
Another thing is the loan amount, which is the financeable percentage of the property value. In general, credit institutions allow you to pay in installments up to 80% of the total cost and to start the procedure you must have at least the difference.
Furthermore, to simulate the mortgage payment, you need to establish how soon you intend to pay the loan. The longer the duration of the loan, the shorter the single installment will be, but the interest weight will increase because the bank’s risk level will be higher than a shorter-term loan.
The Other Options for You
Another variable to consider when it comes to understanding how a mortgage is calculated is its purpose. Here it is necessary to distinguish between second and first house. For the latter, credit institutions generally provide for concessions that make it possible to contain the loan amount and, therefore, to save on the overall outlay.
To propose advantageous financing conditions, the banks intervene on the spread which is their real income. This constitutes the interest rate of the loan which varies according to the reference index chosen.
Finally, in some cases, credit institutions allow you to agree on the frequency of the balance of the installments which can be monthly, quarterly or half-yearly. Remember to also take this variable into account when you decide to simulate the mortgage payment.