A mortgage is taken when buying a flat or a house, or when building, reconstructing and renovating various types of residential properties.
When taking such a loan, every customer would like to know how much they will have to pay a monthly installment for such a loan. The mortgage installment calculator will help you calculate it. Let’s check how this calculator works.
Principle of the mortgage installment calculator
When taking out a mortgage, each bank will check the creditworthiness of the client before issuing a binding credit decision. This ability is interpreted as the possibility of paying off mortgage installments together with interest and other payments on agreed monthly dates.
Before applying for a loan at a selected bank, the client should check for himself whether he has any chance of obtaining it. He can check whether he will be able to repay the capital and interest installment of the mortgage based on his current income, which he receives every month.
You can easily get information on how much a high mortgage installment you will have to pay back online. To do this, use the mortgage installment calculator. It’s an easy-to-use tool that brings us the information you want.
In the mortgage calculator, you only need to provide:
- the amount of the mortgage,
- loan repayment period,
- loan interest rate.
After clicking the “calculate loan installment” button, the online calculator user immediately receives a reply in the form of the mortgage installment amount. Two values are shown here:
- installment amount equal,
- amount of decreasing installments.
In the case of decreasing installments and mortgage repayment in this way, the result of the calculations of the online mortgage calculator is the value of the installment. Everything results from the specifics of loan repayment in equal and decreasing installments during the loan period.
Mortgage repayment system – equal and decreasing installments
The vast majority of banks in Poland when granting mortgage loans give customers the right to choose whether they will pay back the loan in equal or decreasing installments.
Equal installments have the fact that their amount is virtually the same throughout the loan period. Fluctuations in the amount of installments can only result from a change in the mortgage interest rate if we are dealing with a loan with a variable interest rate.
A characteristic feature of equal installments is that in the first loan period they are several percent lower than decreasing installments, which is caused by the difference in the amount of capital repaid.
In equal installments, the borrower repays the capital part more slowly. The same amount of interest is the same for both types of installments. An equal installment, also known as an annuity installment, has a relatively equal value each month throughout the loan repayment period.
The installment itself is higher than the equal installment
Decreasing installments, as the name suggests, decrease as the loan is repaid. Their capital part is always the same, but the interest is higher at the beginning, which means that the installment itself is higher than the equal installment.
If the borrower decides on installments decreasing when paying off the mortgage, he must have a higher creditworthiness than if the same loan were repaid in the equal installments system. So it may turn out that the bank will refuse to grant a loan in this case.
The mortgage installment calculator will indicate what the probable capital and interest installment of the loan will be, but it does not include commissions or insurance premiums. Such components of the cost of lending increase the amount of the mortgage installment.