A mortgage calculator: the variables
During the utilisation of a mortgage calculator (like this one in Multicredit), it is important to understand the different terms that are used. Usually, it is the following variables:
- The value of the property: represents the total costs of the real estate (purchase of the land, construction, but as well additional fees).
- The deposit: also called personal contribution, the deposit represents the money that the future owner invests in his property. The rest of the value of the property would be financed by the mortgage. The deposit must be at least 20% of the value of the real estate.
- The interest rate: be careful when you use a mortgage calculator. Indeed, these one usually allow you to vary the interest between 1% and 6%, which leads to an important difference of cost.
- The mortgage costs. It means that the bank provides you a service (it finances the major part of your house) and the mortgage costs correspond to the costs (per month or per year) of this service.
- Amortization: it is important to understand that the mortgage fees correspond only to the interests and not to the reimbursement of the mortgage. Amortization represents the reimbursement of this mortgage, or the “repurchasing of the parts of your house to the bank”. Without amortization, your house would never be reimbursed.
- Fees and charge: you must always take into account (what propose the majority of the mortgage calculator) the additional fees. These include the notary, service charges (water, electricity), but as well the costs related to the home maintenance (repair costs,.)
Determining the interest rate
When you are using a mortgage calculator, the most difficult part is to determine the interest rate. Indeed, the interest rate, in a mortgage, depends on numerous of factors and can vary a lot depending on:
- The term of the mortgage: in other words the duration of the contract on which the owner commits himself. Once the long-term contract passes, the owner must either do a new contract, either reimburse to the bank or either abandon hjs property.
- The chosen interest rate: we make the difference between the fixed interest rate, unchangeable, and the variable one who is generally more advantageous. However, the last one vary on the fluctuation of the real estate market.
- tthe banks and the offer that has been chosen: every contract being discussed with the future owner, of any warranty given by the owner, can often lead to a lower rates.
The advice of a specialist
It is more than recommended before launching in a mortgage to benefit from the advice of a specialist on the field. Indeed, evaluate the cost of its mortgage with a calculator/simulator is not enough. In case of interest, MultiCredit is proposing and without commitment, the possibility to obtain an appointment for free with a mortgage specialist who will complete reliably a simple calculation effectuate in a mortgage calculator.
