Mortgage loan simulation: how to calculate it online
Are you about to buy your dream home and need a mortgage ? You will surely have made the rounds of the various banks and lenders to get an idea of how much this loan will cost you to buy the house, but are you not clear how much the installments will amount to? A very important tool is the one that allows you to perform a loan installment simulation , thanks to the various online calculators, to understand whether or not it is a subsidized mortgage.
A simulation of the mortgage payment may prove necessary if the loan repayment plan is not particularly clear, confusing the user.
In fact, when a loan is taken out, there is a longer or shorter period during which the borrower will have to repay the loaned amount, through the payment of periodic installments. However, the detailed plan for the repayment of capital, called the amortization plan, is not the same for all mortgages, given that the differences between the various types of financing for the purchase or renovation of a building are considerable.
The most important aspects that differentiate mortgages from one another and therefore affect the calculation of the installment are:
- the amount received on loan;
- the duration of the loan;
- the fixed or variable interest rate;
- the frequency of the installments (monthly, bimonthly or a wider period).
Thus, when you use one of the many online tools available for calculating the installment, it will be this information that is required: the result obtained will clarify what the installment will be for that particular type of loan. Some more sophisticated calculation tools will also provide you with a complete amortization plan , perhaps even distinguishing between the mere repayment of the capital and the interest expense, thus showing you the composition of each individual installment.
Just the interest rate is one of the most important variables to consider. The rate can be fixed, and not change for the entire duration of the loan (the same interest will be applied to each installment), or variable, changing over time, based on changes in a reference rate. It is therefore evident that the calculation of the rate with variable rate is more complicated.
There are therefore specific tools for the simulation of the mortgage rate with variable rate . Just carry out a simple online search, typing “variable rate mortgage loan simulation”. These specialized sites ask for some slightly more specific information with respect to the traditional mortgage calculation: therefore you will have to enter, in addition to the loan amount and the duration of the loan, also the fully paid rate (ie the reference rate that the bank will have communicated to you) and its percentage value, and the initial rate (same procedure). Obviously the two rates will be different if the mortgage is at a variable rate.