Before accepting a loan offer, it is better to study more closely the conditions proposed by the bank. Some borrowing candidates stop at monthly payments and pay little attention to the interest rate applied and the total cost of credit. Younited Credit, the online credit platform, offers you valuable advice.
What formula to calculate the interest of a mortgage?
The calculation of the interest of a mortgage is relatively simple provided you have all the necessary data, namely:
- capital (C)
- monthly payment (m)
- duration (n)
The calculation to be carried out is the following one: 12 xnxm – C. To facilitate the understanding, let’s take an example on these bases:
- C = 200 000 €
- m = 1000 €
- n = 20 years
Here is the operation: 12 x 20 x 1000 – 200 000 = 40 000 €. The interest thus reaches 40 000 €.
Calculate the TEG of a home loan?
The interest rate announced by the funding agency is not very transparent. It is better to use the Total Effective Rate (APR) to compare offers. Indeed, it includes the ancillary costs among which are:
- warranty fee,
- insurance costs,
- fiscal participation,
- potential commissions allocated to intermediaries.
The TEG is calculated over twelve months. This is known as the annual percentage rate of charge (APR), a more meaningful rate that banks must legally publish on their offers. Impossible for the uninitiated to calculate the TEG. However, there are tools on the Internet to determine it from the capital, the rate, the duration of the loan and all the costs associated with the loan.
What does a real estate loan cost?
Despite the steep drop in interest rates, financing real estate is still very expensive. The total cost of the mortgage is calculated according to several criteria, but it is often close to one-fifth of the total amount to be repaid, ie around € 50,000 for a property of € 200,000 financed over 20 years. It is however possible to limit the interest by favoring short repayment terms. For example, a property of € 200,000 acquired in 15 years will cost with a rate of 1.45% about € 33,000. The same property purchased over 25 years with a rate of 1.85% will cost twice as much.