You have already found your ideal home, with the ideal location, just as you had dreamed it. The decision is made, you want to buy it. But now another type of doubt arises; What will be the best option to finance? Can I take over the fees? How much time will I have to pay? To help you answer all these questions and to make a decision there is the mortgage simulator.
What is it?
It is a financial calculation tool that allows us to know what will be the value of the monthly installments of the mortgage according to the repayment term chosen and we can also know what are the interests to pay for the borrowed money.
Keep in mind that the mortgage simulator will show us constant monthly installments (that is, always the same). In a real mortgage loan, the fee to be paid will vary slightly, since not every month has the same number of days.
How does it work
The mortgage simulator works with a series of variables that are what will help us to know the result:
- Price of the house to buy
- Amount we are going to contribute
- Payment term
- The annual interest rate
So that for the mortgage simulator to be useful to you, the normal thing is that you know the price of the house, the money that you will be able to contribute, the period of years in which you want to return the money and the interest rate.
Things to consider before performing the simulation
There are a number of aspects that we must assess so that the simulation is as close as possible to reality. The first is that the habitual thing is that the entities do not finance 100% of the house, reason why the maximum that we should put would be 80% (the limit that usually they grant).
And the second is that hiring a mortgage is not only hiring the financing of the value of the home, there are a number of associated expenses that are not valued in the installments but that we must keep in mind; the hiring of life or home insurance, the minimum expenditure on credit cards … etc
As you can see, the mortgage simulator is a tool that can help us see with better clarity what type of mortgage will be more profitable, what will be the cost of the installments that we will have to assume and how many years will it last. However, we must not forget that it is a simulation that can help us guide us and get an idea, but in order to calculate the mortgage in a real way it is best to consult with a bank.