Learn mortgage calculation from experts. Calculating the mortgage installment allows you to know concretely the monthly amount to be paid. To do so simply use some special sites also made available online or the Excel template and enter within them all the items and information inherent in the financing to be obtained.
How to calculate the mortgage payment
The decision to buy a house inevitably brings with it the need to outline your real potential inherent in the purchase, establishing a precise monthly installment that you will have to incur to pay off, during the course of the years, the amount of the property. For this you need to understand not only whether the expense will be affordable for you in the long run but also whether you possess all the parameters required by the banks to approve or not approve the mortgage.
The calculation formula for the mortgage installment contains within it several items that can affect both negatively and positively the amount you will be obliged to pay monthly to succeed in purchasing your property. Knowing the estimate on this figure will allow you to determine your monthly installment almost with absolute certainty. The first variable that influences first is the value of the property, that is, its actual selling price, which in most cases equals the price per square meter then multiplied by the total square meters.
In addition to this factor to affect could be additional details such as: the condition of the house, the area in which it is located, the energy class, the rooms in it and the type of heating, as well as the presence or absence of open spaces and that of the elevator. Another value to pay attention to is then the percentage that will be financed to you by the lending institution, as in principle the bank allows you to installment up to 80% over the total cost.
In order to make a mortgage simulation, you will need to determine the precise time frame within which you expect to fulfill your financing. In that circumstance, the longer the term of the loan, the lower the single monthly installment will be, but conversely you will see the interest increase. Another piece of information you need to take into account is the purpose of the loan. In this case you will have to specify whether your financing request is related to the purchase of your first or second home, as there are different facilities for each.
The importance of the interest rate
The various lending institutions, in order to offer customers advantageous financing conditions, try to intervene on the spread, since this value represents to all intents and purposes their real income. Moreover, it is always the spread that constitutes the interest rate of the mortgage, which can vary according to several factors: to the Euris and Irs in the case you will opt for a fixed-rate credit while the Euribor for financing with a variable rate. In case you choose to opt for a fixed-rate mortgage, you can enjoy the certainty of paying off the exact same installment from the first month until the last.
In fact, the percentages of market values are established when the contract is signed and will remain unchanged until the total balance is paid off. On the contrary, with the variable rate, the monthly installment may undergo continuous variations that may decrease or increase the amount you have to pay. Also within the mortgage you will be able to know the value related to the Tan and Taeg. In the first case we talk about the Annual Nominal Rate and it refers to the interest rate as well while the Annual Percentage Rate contains the charges, expenses and interest, necessary to access the credit.
Calculate your mortgage installment using Excel
Thanks to Excel you can easily calculate your mortgage installment in just a few minutes. To do this, all you need to do is select the Mortgage Loan Calculator item and enter the required data in the set table. You will need to specify: the purchase cost of the property, the term of the loan, the interest rate, the start date of the loan and finally the amount of the mortgage. Once the entry is complete, the spreadsheet will automatically calculate the monthly installment.
In another Excel sheet, you can also review in full the summary regarding the amortization schedule. There are really many variables that come into play in calculating the mortgage that can ultimately drastically change the amount of the monthly installment to be paid. The one figure that you will not be able to know exactly, will be that of the interest rate since it includes the spread that each lending institution sets in relation to individual offers. To avoid this complication you will simply use one of the various calculators available on the Internet. In this case you will only have to enter the amounts of the variables inside the boxes to understand how much the monthly installment amounts to.