Elements of the Loan; The Amortization Plan

A very important element of the loan is the amortization plan.

Very often we worry about what the amount of our mortgage payment can be, and rightly so: it is from the value of the installment that we will be able to understand if we will be able to sustain the effort that will be required to repay the sum that it was given to us and if this could have a significant impact on our standard of living.

 

Depreciation

Depreciation

But the amortization plan is a document that can give us a lot of valuable information if we know how to read it well. As we will soon see, it is a tool that can be useful for the entire duration of the loan:

  • in the initial phase, to predict how it will evolve over the years;
  • during the entire duration of the loan, to monitor the situation and eventually decide whether, for example, to anticipate the extinction of a part of the capital.

The amortization plan can be estimated in advance and is one of the important documents to be requested from the bank in the initial phase, the one in which we are deciding the Institute turn to. The elements needed for its calculation are 3:

  • the amount paid;
  • the interest rate;
  • the duration of the loan.

Let’s see a practical example, in which we want to simulate the amortization plan in a “school” case:

  • disbursed capital: 100,000 euros ;
  • interest rate: fixed, equal to 3% ;
  • duration of the loan: 10 years.

The table below shows the first part of the amortization plan, with some key values ​​highlighted below.

 

There are at least four important information in the amortization schedule

There are at least four important information in the amortization schedule

Let’s look at them in detail:

  • The number of installments ;

In the first column is the number of the installment, in total, we will have in this case 120 rows (12 for each year of loan duration).

  • The amount of the installment ;

In the second column, we find the amount of the installment. In this case, being a fixed rate mortgage, we will have the guarantee that this value will remain constant for the entire duration of the loan.

  • The remaining credit ;

The remaining credit is shown in the second column. It is the part that remains of the capital that we will still have to repay, calculated from time to time at the time corresponding to the payment of each specific installment.

There are two things to note:

– the remaining credit is very important if we want to pay off the loan early, or part of it. In the event that we wanted to extinguish it completely, in fact, it would indicate just the amount we will have to pay. In the case of partial extinction, the new installment we are going to pay will depend on the percentage value of what we will pay compared to the remaining credit.

– if we note the residual credit at the twelfth installment, we see that the value is not equal to 90% of the amount disbursed (90,000 euros in this case) but is higher. In other words, in the first period the residual credit decreases less than proportionally with respect to the duration of the loan. This is because in the first part the interest is paid more.

  • Capital and interest share.

The last two columns show, for each installment, the principal amount and the interest portion. The sum of these two values ​​is equal to the amount of the installment (966 euros in this case).

So, for example, the first installment will consist of:

– a principal of 716 euros, which constitutes the part of the installment intended to lower the residual credit;

– an interest share of 250 euros, ie the part of the installment that remunerates the advance of the capital disbursed by the bank.

It is interesting to note, for example, comparing these values ​​with those relating to the installment n. 19, how the principal amount increases and that interest decreases over time, confirming what was said in the previous point: in the first part the interest is paid to a greater extent.

Now let’s see what happens at the end of the amortization period.

The installment has always remained the same, obviously. The interest rate has fallen, almost to zero, and almost all the amount of the installment is destined to lower the (little) remaining credit left. With the last installment (No. 120) we finally extinguish all the remaining credit and, consequently, the mortgage itself.

 

The amortization plan for variable rate mortgages

mortgages

In the case of a variable rate loan, the amortization plan gives us the same information. It must however be taken into account that, when it constitutes a forecast, we cannot know in advance how the rate will evolve. So the plan calculated before the loan agreement is signed will consider the interest rate in effect at the time. The amount of the installment thus calculated, and the interest rate, may change over time based on the interest rate trend.

Financial and Loan Tips for University Students

Your professional education is one of the most important stages of your life in terms of preparing for job skills in whatever your preference, such as engineering, human sciences, health sciences, etc.

Control your expenses with these 5 financial and loan tips for college students.

Control your expenses with these 5 financial and loan tips for college students.

Being the university, in addition, a time of preparation and complete dedication, the economic problems will always be stalking your portfolio, fortnight or monthly pantry. That’s why you as a university student, we invite you to read these 5 financial tips to manage and make your money pay more.

1. Plan and categorize your monthly expenses

Make a small list of all your fixed expenses with their respective category, top of money, days of payment, etc. For example, the cost of tuition, gasoline, your monthly cell phone rent, meals away from home, stationery.

With this you can manage in a responsible way the money that is necessary for the continuation of your studies. Remember that graduating from the university is also graduating in economic independence and control of finances.

2. Loan or rent your educational material

Loan

Books of up to 1,000 pesos? Architectural materials of almost 600 pesos? We know the importance of educational material in whatever your university career. But sometimes our budget does not allow us to have our own things. We recommend you to be aware and loan or rent with friends from other generations, library or digital systems for used books, materials such as squares, scrapbooks, software (this with student licenses that the same university can grant you, NO to piracy) etc.

3. Plan your vacations and fun

Do you live in the city and do you like to go out every weekend or on holiday? Are you a foreigner and travel every weekend because you miss your hometown?

Having fun and going out is not bad but you should be careful with all the activities that have this category, since they are the ones that are most reflected in the last few days of the fortnight when you do not have money for other important expenses. Be prudent and administer all your outings of antrum, cinema, restaurants with friends, concerts, bars or vacations according to your monthly budget. We assure you that if you manage a cap on how much money you can spend per exit, you will have more options during the month for your fun.

4. Get ready with a savings or afore fund

If you work half a shift or during summer vacations, you take advantage of the time to take care of a job, you must start thinking about your retirement fund, called Afore. According to the survey “Savings and Future: How do university students think?” By the Mexican Association only 4 of 10 young people have thought about their future retirement.

That is why we recommend you start planning and find the best institution of your choice to start with this future savings.

5. Pay your personal credits on time

credit

If among your finances you make purchases with personal loans such as clothes, department stores, banking, automotive, etc. Always try to have your debts and payments controlled, in order not to generate interest that may affect your monthly spending plan and your credit history.

The guide to loans offers: discover all types

The Italian market, together with the French and Belgian markets, are the main ones from which the best revenues for the French group derive and it was with the purchase that it succeeded in pursuing a commercial strategy based on the offer of appetizing credit and financial products with a purely traditional content “core” products and the most innovative ones with high added value and a source of high mark ups for families, professionals, private companies and public bodies.

A range of loan offers to meet all your financial needs

loan

On the site of the credit institution it is possible to have a real culture of the range of financial loan offers that can be found and “customized” according to one’s own financing needs ; if we are private individuals, families, private or public employees, students, pensioners, we can benefit from and choose from a rather complete range of products designed for us. Let’s see them in detail.

Student loans

Student loans

They are aimed at financing a university or academic course of study to obtain a three-year degree, a post- graduate Master’s degree or a Specialization Course; for this finalized financing it is possible to choose between three different customized products:

  • the XZY product with a fixed-rate loan (Taeg = 3.97%) that allows for an amount ranging from 500 to 3000 euros to be used to finance school expenses, those for the purchase of an instructive course (language , of computer science), to book a study trip abroad with the possibility of duration from 6 to 12 months;
  • the XZY Loan product made available to meet the needs of young students who want to obtain a university degree or post- graduate degree who are guaranteed with a surety by third parties, this is a financial product that requires a variable pre-amortization period from one to three years with fixed rate, amounts up to 20000 euros and with repayment terms up to ten years;
  • the product XZY Loan Discount & Praise which allows you to obtain a loan amount up to 20000 euros with repayment duration up to 120 installments and with a variable and rewarding interest rate established on the basis of the average curriculum of university students.

Personal loans for private employees

Personal loans for private employees

It is the type of loan suitable for private employees who have to face a purchase of a good / service, face an urgent expense and finance a project: it is the new XZY financial product, the fixed rate loan for amounts up to 100000 euros, possibility to customize the monthly payment according to customer needs, duration up to ten years, possibility after one year to request the suspension of one or more installments in case the debtor fails to properly fulfill the contracted obligation , right to request, starting from the sixth month of repayment of the loan, a new donation of financial resources based on outstanding credit.

Loans for public employees

The loans for public employees are designed for the public employment and for pensioners (from the public sector) with the possibility of obtaining an amount of up to 100,000 euros, of personalizing the monthly payment according to customer needs, lasting up to ten years, possibility, after one year, to request the suspension of one or more installments in the event that the debtor is unable to correctly fulfill the contracted obligation, the right to request, starting from the sixth month of repayment of the loan, a new supply of financial resources based on the outstanding credit (reload option).

Loans for energy efficiency

This is the XZY Family product designed to finance 100% of the project to improve the energy level of your home up to a maximum of € 100,000 to replace fixtures, install new heating systems, for solar panels with subsidized rates, benefiting from tax breaks and a free energy check-up aimed at estimating the benefits compared to the costs incurred. It is possible to repay the loan up to a maximum of ten years and after six months from the beginning of the repayment of the debt you can request the granting of an additional loan amount based on your creditworthiness (Option reload).

XZY W sports loan

The XZY W Sport Loan is designed to finance gym membership, participate in a sports course or purchase sports equipment, is a fixed rate financial loan (Taeg = 3.97%) with the possibility of obtaining an amount varying from 500 to 3000 euros to be returned within a year.

XZY loan Adopt

The XZY Adottami loan is the form of loan suitable for facilitating those who want to adopt a child in collaboration with the Association of Friends of Children (AIBI) taking advantage of the advantageous fixed rate with a repayment term of up to ten years.

In addition to this wide range of loans designed to meet every need, those who hold a pension or are a state or public employee can benefit from the sale of the fifth with the XZY since the latter operates in collaboration with the INPS.

How many years do Italians need to pay off their home purchase loan?

It is a question that all those who have opened a mortgage loan have asked themselves. The choice of the duration of the loan, in fact, is fundamental, as it has a direct impact on the value of the installment to be paid.

A longer loan term results in a lower installment: this allows you to apply for a higher loan that is compatible with your standard of living.

However, it must be borne in mind that the increase in the duration of the loan entails a greater amount of interest to be paid and, in the case of a variable rate, greater uncertainty regarding the evolution of the installment amount over the years.

 

The mortgage market and interest rates

The mortgage market and interest rates

First of all, let’s see what market context we are experiencing, both in terms of real estate sales and home purchase loans

The real estate market is recovering slightly: in recent months, volumes have been increasing, even though prices are struggling to recover. So a contained recovery of the market, we are still far from the values ​​reached in the years of the real estate boom, those before the crisis

Interest rates are particularly favorable, thanks to the policy of the ECB, with the quantitative easing still active and the rates that should not rise before 2019. And so the Euribor, the reference rate for variable-rate mortgages, is still in negative territory, with great satisfaction for those who have chosen this type of loan. But also the Euros, the analogous indicator for the fixed rate, has particularly low and interesting values, to the point that the mortgage market in recent months has been supported by the subrogations of those who have decided to move from variable to fixed.

How are the Italians’ choices regarding the duration of the loan being modified?

How are the Italians

In this market context, what is happening to one of the most important parameters for choosing a mortgage, or its duration?

According to the analysis of some important operators in the sector, the average duration of mortgages today would be around 18 years, with a significant increase compared to a few years ago, when the same value was about one year lower, close to 17 then.

At first glance, this might seem like a negative signal about the state of Italian finances. It could, in fact, be inferred that, in order to be able to purchase a property, and given that the economic conditions are less advantageous, Italian families are forced to borrow for a longer period, in order to be able to reduce the monthly payment to be paid to pay off the loan.

In reality, if we look closely at the survey data, there is also an increase of around 8% in the average amount provided, from € 123,500 to € 133,500. So it would seem that the increase in the duration of the loans does not depend so much on a reduction in the income of Italians, but rather on the desire to ask for a larger amount, perhaps to purchase a more valuable property taking advantage of the particular conditions on mortgages, which are very favorable, as we said.

Ultimately, we can unbalance and imagine how the Italians make their choices about mutual: a house is rarely purchased, perhaps only once in a lifetime, and therefore you orient yourself for the best, compatible with your finances. If the conditions are favorable, you choose to buy a higher quality product.

Who gets into debt for longer, and those who prefer shorter loan periods?

Who gets into debt for longer, and those who prefer shorter loan periods?

The national average is around 18, as we have said. It is interesting, however, to see how there are quite obvious differences between the Italian regions.

And so we have the dells that arrive up to an average loan term of 21 years, followed by the Losio with 20 years and 3 months. On the other hand, Fruitloan, with 13 years and 10 months, are those who definitely prefer to work for less long periods.

Also, in this case, the differences “character” of the Italians emerge, confirming the fact that the choices, when we talk about mortgages, are very personal and not always in line with the “logic” of the market.

How much impact does the installment have on Italian living standards?

Finally, an interesting data on the impact of the installment for Italian families: although higher amounts are requested, the favorable market conditions mean that there is still an average decrease in the installment of around 10% (today it is around 600 euros) and that this is about a quarter of the salary, on average.

On this point, therefore, it seems that Italians are less exposed than before but beware of very low rates, which can, in practice, only increase.

Home Title Loan and Mortgage: attention to the differences

The 3 things to know:

  • Home Loan : Financing to deal with expenses related to a property
  • Home mortgage : medium-long term, high amounts, enjoys tax breaks
  • Compare and choose the cheapest home loan to save on expenses

Home Title Loan and Mortgage

Home Title Loan and Mortgage

The home loan is a form of finalized financing, which allows to face the expenses related to the building. Home loans, as with all targeted loans, can go as far as financing the entire expenditure to be faced, even without advances.

Unlike the home loan, it does not provide for the provision of real guarantees , such as the mortgage. Therefore it is especially appropriate for atypical workers, who do not have a permanent contract and if they need to get funding in a very short time.

Differences between home title loan and mortgage

Differences between home title loan and mortgage

The main difference between a mortgage and a loan lies in the purpose for which mortgages and loans are requested: the first are generally to buy a house, the second for small expenses: renovation, maintenance, restoration or purchase of furniture.

The home loan, in the form of finalized financing , requires precise destination and installments with greater interest, but with the advantage of not having to present any guarantee or almost. Furthermore, the loan generally has a much longer duration than the loan. 

We summarize the fundamental elements that distinguish a Home loan from a mortgage:

The Home Title Loan

The Home Title Loan

  • A loan generally has a short duration
  • The amounts requested through a loan are generally of a modest amount so as not to require any guarantee, except in special cases
  • The loans do not benefit from particular tax reliefs precisely because they are aimed at satisfying needs and needs that are not considered primary
  • Personal loans do not require you to declare the purpose for which you request the money, which can be used by the debtor in the way you want

The Mortgage

  • A loan is always aimed at buying a predetermined asset even before borrowing money
  • The mortgage benefits from special tax breaks (you can in fact deduct part of the interest from the taxes)
  • The duration of a mortgage is medium – long (even thirty years)
  • A loan contract, since it provides for the loan of an usually important sum , always contemplates the request by the Bank for real guarantees, such as the mortgage on the house.