A loan is understood as the operation by which a financial institution places at the disposal of the client a certain amount of money that is stipulated through a contract, in which the obligation to return that money is acquired in a certain time settled down.
The contract also establishes the commissions and interest that the client has to pay to the bank in exchange for receiving said amount. When we talk about a loan, the amount of money borrowed from banks is called the principal, while the interest is the price paid for having that money. The period of time to be able to repay that loan is called a term.
Although there is usually only a distinction between personal loans and mortgage loans, banks usually offer Personal loans they are generally used to finance specific needs at a particular time, it is usually small economic amounts that are usually used for example a trip, a wedding or an unexpected repair, Consumer loans this type of financial product is used to finance consumer goods of a lasting nature, such as a car, motorcycle or household appliance.
Both personal loans and consumer loans are usually smaller loans with a relatively short repayment term and Mortgage loans they are characterized by the fact that, in addition to the personal guarantee, a “real guarantee” is also offered as a guarantee of payment, which consists in the mortgage of a real estate.
In the case of not returning the loan, the bank becomes the owner of said home. Mortgage loans are normally used for the purchase of a home, although they are also requested for the creation of a business.
The real guarantee of the mortgage loans derives in that the interest rates that are applied are lower than in the rest of the loans. An essential aspect to take into account to contract a mortgage loan is that the amount borrowed may never exceed 80% of the real value of the home placed as collateral.
As we mention there are many loans and different methods of repaying them, but the objective of this article is that each and every one of you can calculate the different amounts of your mortgage loan. Most of the people start admitting early cancellations for all or part of the loaned capital.
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This case would involve the re-calculation of the entire amortization table since one can choose to reduce the installments to be paid (by reducing the capital to be amortized, the interest payable is also reduced) or by reducing the duration of the loan.
The calculation of the fixed installment of a loan is made by using the formula (EMI = [P x R x (1+R) ^N]/ [(1+R) ^N-1]) and calculating the loan with free loan calculator.
Where P is the amount of loan, R is the interest rate per month and if your interest rate per annum is 15% then the rate of interest while putting value will be calculated by 15/(12*100) and N represents the number of monthly installments.
Assume a loan of € 200,000.00 that must be amortized in 25 years at an interest rate of 3.5% and with a periodicity in the monthly payment. The fee to be paid for each period will be € 1,001.25.
Always bear in mind that the loans are usually updated (mortgage revision) every year and the interest is changed according to the policies, so you only have to change the amounts and you will automatically know what quota will correspond to you for the following year.
In addition, you will also know how your loan affects a partial cancellation and the fee that you will have left after doing it, that is, how this article will help you.