Effective Options for the Best Mortgage

The consumer center provides a quality loan example calculation, which shows the advantages of the annuity loan: basis is a financing sum of 100,000 dollars and a term of 25 years. The effective interest rate is 5.01 percent for the first 15 years and the monthly burden is 623.33 euros. This results in the annuity loan example a residual debt of $ 43,011.14 after 15 years.

Some combination models are still after the same period almost 60,000 dollars left. The reason for this: With the annuity loan, the repayment starts immediately, in the variant, the customer pays for years only the interest on the loan, while at the same time the repayment amount is accumulated through a home savings contract.

Calculate follow-up financing

After the end of the fixed interest period, which is often 15 years, a follow- on financing for the repayment loan must be forthcoming, since the loan amount has not been fully paid off. In the case of an annuity loan, the subsequent monthly exposure depends on the then prevailing interest rate. The lower it is the better course for the borrower. The good mortgage broker in singapore helps a lot here.

Which factors are decisive in a comparison?

In order to determine the best possible interest rate for the loan, several factors must be included in the annuity loan comparison. In addition to the level of regular income, collateral pledged and available equity, there are also factors to be considered by banks. Thus, the interest rate of the loan is subject to the current interest rate development on the free market. Banks offer various debit interest rates, which, with the addition of processing costs, are shown as annual percentage rate.

  • When comparing different financing offers, many builders only consider the effective interest rate, which is calculated according to legal regulations. “However, this legally required effective interest does not include all the credit costs,” warns experts. For example, in new buildings, provisioning interest and partial payment premiums are due for the period between the loan commitment and the loan payment. For some banks, borrowers also have to pay fees to calculate the value of the property.
  • Such costs can significantly increase the effective interest rate. For example, if the ancillary costs are one percent of the loan amount, the actual effective interest rate for a ten-year fixed rate loan is 0.15 percentage points above the effective interest rate specified by the bank. It is worthwhile to look closely to actually agree on the best conditions.

Depending on the current debit interest, the question of which interest rate commitment should be determined is also relevant. With rising interest rates, long-term fixed interest rates of typically ten or fifteen years are beneficial, as they secure the lower interest rate. The resulting loss can be compensated by banks with a surcharge on the borrowing rate, which is usually worthwhile for the borrower in the long term anyway. With falling interest rates, correspondingly shorter fixed interest rates are more profitable, since then faster follow-up financing at more favorable credit terms is possible.

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