User manual of the mortgage credit simulator

The mortgage credit simulator allows you to calculate the amount of the monthly instalment of a new or existing mortgage credit and to check how this instalment varies as a result of changes in some variables, such as changes in the amount of capital outstanding, the loan period or the interest rate.

The result of the simulation also gives you the total cost of the loan.

What data do you have to enter in the simulator?

To obtain a simulation, you must fill in the following fields:

‘Residential loan’ – Yes or No;
‘Loan amount’ and ‘Other amounts financed’ (if applicable) – their sum corresponds to the capital outstanding‘;
Nominal annual interest rate’ – represents the cost associated with interest on the loan and corresponds to the sum of the reference interest rate and the spread;
‘Loan period in months’.

You must fill in the fields related to ‘Grace period or deferral of capital’ if the loan includes:

A grace period – initial period during which there is no capital amortisation, only the payment of interest;
Capital deferral – payment of part of the capital is postponed until the last instalment.

If applicable, you must also fill in the following fields:

‘Charges paid at the outset of the loan’ – these are the fees paid initially and the single insurance premium, if any of the insurance is paid at the outset;
‘Charges paid at maturity’ – these are the fees paid right at the end;
‘Insurance premiums’ – these are the annual values of insurance premiums.

What can be simulated?

Using the example of a residential loan where:

Loan amount – €150 000
Loan period – 360 months (30 years)
Nominal annual interest rate – 3.5% (indexed to 6-month Euribor, with an initial amount of 2%, with a spread of 1.5%)

The monthly instalment (capital and interest) is €673.57 and the annual effective rate of charge (representing the total cost of the loan – interest, fees, insurance premiums and taxes) is 3.607%.

These amounts increase if the simulation includes information on the initial and final charges associated with the loan and the insurance premiums.

The total amount of interest corresponds to €92,484.13.

Change in the loan period

If you choose a period of 35 years (420 months), with the remaining conditions of the example being constant, the monthly instalment is €619.94.

If you choose a longer term, you get a lower monthly instalment. However, at the end of the loan term the total amount of interest paid (€110,373.10) will be higher than the amount paid if you had opted for a loan with the shorter term.

Refixing of the interest rate

The example interest rate is reviewed every six months, according to the average amount of the reference rate (6-month Euribor) observed in the month prior to the respective revision.

To assess the impact on the monthly instalment of the change in the amount of the reference rate, you must change the following fields accordingly:

Loan amount – after six months, the amount of the outstanding capital is €148,573.23;
Loan period – after six months, the number of instalments left corresponds to 354 months;
Nominal annual interest rate – assuming the spread remains unchanged (1.5%) and Euribor goes from 2% to 3%, the amount of the interest rate is 4.5%.

Due to the increase in the interest rate, the monthly instalment amount went from €673.57 to €758.85.

Renegotiation of the period or spread

Admitting that, after two years, the loan conditions are renegotiated and the loan period is shortened by ten years and the spread is reduced by 0.1%.

In order to assess the impact of the change in conditions on the monthly instalment, you must change the following fields accordingly:

Loan amount – after 24 months, the amount of the outstanding capital is €144,140.23;
Loan period – after 24 months and shortening the term by 120 months, the number of instalments left corresponds to 216 months;
Nominal annual interest rate – assuming that the 6-month Euribor remains unchanged (2%) and the spread goes from 1.5% to 1.4%, the amount of the interest rate is 3.4%.

The monthly instalment is now €893.13.

Interest on the loan is reduced from €92,484.13 to €59,081.68 (which corresponds to the sum of interest paid in the first 24 months – €10,305.84 – and the interest paid on the renegotiated loan – €48,775.84).

Early partial amortisation

In order to know the effect on the monthly instalment of a partial capital amortisation of, for example, €25,000 after ten years, you must change the following fields accordingly:

Loan amount – after 120 months, the amount of the outstanding capital is €116,140.31. Deducting the €25,000, the capital outstanding is €91,140.31;
Loan period – after 120 months, the number of instalments left is 240 months;
Nominal annual interest rate – assuming that it remained unchanged, the amount of the interest rate is 3.5%.

The monthly instalment is now €528.58.

The credit institution may require the payment of an early repayment fee, up to a maximum of 0.5% of the capital repaid, corresponding to €125 (0.5% x €25,000), in this case.

Capital grace period

To know the effect of a grace period of, for example, 24 months on the monthly instalment, you must also fill in the field:

Grace period – in this case, 24 months.

During this 24-month period, the monthly instalment will be €437.50. When the loan resumes its standard repayment mode, after the grace period, the monthly instalment amount goes up to €700.95.

Interest on the loan increases from €92,484.13 to €96,019.11.

Capital deferral

To know the effect on the monthly instalment of a capital deferral of, for example, 30%, you must also fill the field:

Capital deferral – in this case, 30%.

The monthly instalment is now €602.75, except for the last instalment.

The last instalment has the amount of €45,602.75, which corresponds to the sum of the monthly instalment with the total deferred capital (0.3 x €150 000).

Interest on the loan increases from €92.484,13 to €111,988.89.

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