The rate of a mortgage corresponds to the remuneration of the lender . It depends directly on the combination of two factors:
It applies directly to the principal borrowed throughout the loan period. It defines directly the monthly deadline which contains:
The amortization table decomposes for the duration of the mortgage, the monthly payment and gives all the details.
Fixed or variable?
under a fixed rate, depreciation can be either progressive (as is the case for most loans) or constant. This last formula makes it possible to amortize each month the same share of capital but is only very little used. The general fall in fixed rates over the last two years is in their favor.
Variable lending allows for more advantageous conditions, at least initially. They are most often based on the Euribor 3 month interbank index that measures the confidence that agree the largest European banks.
The current formulas often include security “locks” such as the cap rate which sets an upward ceiling or constant maturity that allows any increase to be passed on over time and not the monthly payment.
In recent years, banks offer a “mixed” two rates. The loan starts with a fixed rate over a chosen period and then the rate becomes variable until the end.
The negotiation of the terms of a loan depends on the different elements that make up the file and on the bank’s interest in its future client. Clearly, the better your record, the better the conditions. Be aware that the bank conducts a comprehensive analysis of your situation. It relates to:
The most effective solution for studying two loan offers is to compare the TEG of each of them. If you do not have these items, be sure to keep only those proposals with insurance whose contributions have a heavy impact on the cost of credit.
Banks have the obligation to indicate the TEG in the prior offer of home loan. This indicator is the only element of analysis that makes it possible to take into account all the costs that impact the cost, ie the interest on the loan, the insurance contributions, the filing and guarantee fees. .
All advertisements and offers of consumer loans issued from 1 January 2011 must indicate the APR , which is neither more nor less than an annualized TEU, even if the method of calculation differs.
The concepts of proportional rate and equivalent are based on the calculation of simple interest and compound interest. In the context of a home loan, only the first one will be used to calculate the monthly installment found in the depreciation schedule. It is simply the annual rate divided by 12. The second is used to calculate the return on investment transactions and refers to the compound interest formula.