The fixed rate mortgage is certainly the financing that is most frequently requested because it is synonymous with security.
Let’s see everything you need to know about this loan.
The fixed rate mortgage payment, how it works and benefits
The installment of the fixed rate mortgage works in a very simple way since every month the amount of money that you will have to pay will not undergo any kind of variation , thus leaving the amount identical to the one you have supported with the previous payment.
This type of loan can be chosen by you especially if you are not expert in controlling changes in rates, spreads or if you want to take advantage of this type of installment , or avoid that it can undergo excessive changes and therefore having a greater weight on your private economies.
But this advantage could also be seen as a double-edged sword as the rate could fall, generating a lower amount of the installment, thus preventing you from obtaining a small savings as the rate of your mortgage will not change.
How is the calculation of the installment of the fixed rate mortgage
To know exactly how much the fixed rate of your mortgage will amount to , before the contract is signed and the acceptance on your part, you must know how much the spread and the IRS index amount to the duration of your loan.
These two amounts will be added together and will give life to the fixed rate of your loan and this means that if the spread settles on 2% and the IRS value for 20 years is 3%, the rate of your mortgage will be 5% and this will not undergo any kind of modification as regards the entire duration of the repayment plan.
Regarding the overall calculation of the mortgage payment, you must know that a simple mathematical formula is used, namely:
C x (1 + TA / PA) (PA x A) X TA / PA / 1 + TA / PA) (PA x A) -1
where C indicates the amount of money you have requested, TA the annual rate in decimals, PA the number of installments you will pay during the year and A total years of financing. In this way it is possible to know the exact amount of the total installment of the loan, to then subdivide by the total number of installments that you will have to pay.
The best fixed-rate mortgages of the moment
On the front of the best proposals regarding the mortgage it should be noted that the most convenient, if you have to ask for a sum of 100 thousand euros to be repaid in 25 years is that proposed by Hello Bank, which offers a monthly payment of 419 euros and APR of 2.04%, with miscellaneous expenses and insurance policies included.
The BNL bank also offers a good mortgage with the same characteristics, even if the initial costs are slightly higher and the APR is 4 cents higher. These two banks therefore offer the best possible product if they require large sums of money to be returned on long time scales.