The annual effective insurance rate (TAEA) allows you to assess the share of insurance in the total cost of the loan. It, therefore, allows you to better compare the different loan and insurance offers.
TAEA calculation method:
TAEA = TEG * with insurance – TEG excluding insurance
* TEG corresponds to the cost of your loan and includes all of the elements of the cost of the loan.
In order to obtain the loan insurance amount for the calculation of your monthly mortgage payments, banking organizations, as well as insurance companies, also take into account several criteria which are as follows:
- Age of the person to be insured
- The statute
- The professional situation
- The term of the loan
- The loan amount
- If the insured is a smoker or not
Insurance plays an essential role in the calculation of your monthly mortgage loan because it can represent up to more than 30% of the cost of credit.
The interest on a mortgage is the method of remuneration of the banking organization which grants you your loan. This interest is paid in addition to the amount you borrow for your purchase.
Depending on your profile and the amount you wish to borrow, the interest rates applied may vary. The more you want to get a large sum of money, the longer the repayment of this sum and your risky profile for the organization that lends you money.
He will, therefore, want to compensate for his risk with high interest. And vice versa for the opposite situation: over a lesser period, a profile with higher earnings can succeed in negotiating more attractive interests.
These interests are important for the calculation of your monthly mortgage payments because they represent the major part of the cost of the latter (next to application fees or loan insurance).
Depending on your profile and your situation, you may end up paying much more for your acquisition than its original value. This is why it is essential to properly calculate and negotiate this interest rate.
What is called a personal “contribution” corresponds to the sum that a borrower invests through his investments in the acquisition of his property?
How much I can borrow without contribution:
We also speak of “110% financing” (the bank finances 100% of the property and 10% of additional costs).
A contribution reassures the bank when applying for a mortgage concerning your savings capacity. However, it can agree to lend you the sum for your mortgage under certain conditions which are as follows:
- Have a stable job
- Keep certain stability between the price of your mortgage and the price of your old rent
- Keep enough food to live
In the case of a mortgage without contribution, it is the debt ratio that the banking organizations will look at to estimate the amount to which you can claim.
For information: in most cases, the borrower does not reimburse an amount greater than 33% of his monthly income. Obviously, it depends on his profile, your Fine Bank broker is there to support you.
How much I can borrow with contribution:
The contribution should ideally represent the “ancillary” costs of your mortgage (notary fees, guarantee, file, etc.).
It can be expressed as a percentage of the total amount of your mortgage. If in theory, the share of your contribution on the total amount may vary, banking organizations generally ask for at least 10% of personal contribution which is used to cover the so-called “ancillary” costs (all costs in addition to the amount of your property: notary fees, warranty, dossier, etc.).
The larger your contribution, the easier it will be for you to negotiate competitive interest rates and also facilitate the acceptance of your credit by an organization.
The term of the loan
The duration of the loan can vary from one borrower to another depending on his situation and the amount he wishes to borrow. Other factors can also affect the duration of your loan such as your income, your contribution or the number of borrowers (single borrower or borrower and co-borrower).
To assist you in calculating your mortgage, Fine Bank offers you a calculator to estimate your borrowing capacity and another calculator to estimate your monthly payments!
Thanks to this you will be able to assess the total cost of your mortgage from the amount needed up to your monthly payments!
Why be accompanied by a broker?
In practice, many other elements can come into play in the calculation of your monthly payment. The best is to call on a professional like Fine Bank who will be by your side to support you in your efforts.
In addition to this support, it will help you find the best offers on the market that match your profile for your mortgage by making the competition play in your favor!