If you finance a property with an annuity loan, the monthly loan rate (annuity) remains constant during the agreed rate fixation and enables planning security. The loan installment consists of interest and repayment, with you paying off more over time and paying less interest at the same time.
The annuity loan is a popular form of real estate financing and enables reliable planning. The advantage of planning security is offset by less flexibility. To remain flexible, you can arrange special repayments in advance. Your lender sets a fixed borrowing rate in the contract: This applies until the end of the borrowing period. The fixed interest rate is often ten years, but you can set it individually or for a shorter or longer period.
During the fixed interest period, you pay back the same amount each year as an annuity. Let the experts of a finance broker like Lite advise you on which loan rate you can cope with and which interest rate fixing period makes sense. Keep an eye on your monthly expenses and take into account special expenses that are incurred irregularly.
In the beginning, the loan installment consists largely of mortgage interest and you don’t pay back yet. The shares shift over time. You repay more of your remaining debt every month and pay less interest in return. This is due to the fact that the interest is calculated on the respective remaining debt. If the amount of the remaining debt decreases, there is less interest. Since the amount of the repayment changes over time, your contract usually contains the initial repayment rate.
As a rule, a residual debt remains at the end of the fixed interest period. To repay this, arrange follow-up financing with your lender. Alternatively, you can take out a full repayment loan : In this case, you repay your annuity loan in full by the end of the fixed interest period.
If you want planning security, but the full repayment loan is not an option for you, you can take out a forward loan for follow-up financing. This sets the follow-up interest rate with which you pay off the remaining debt.
With the Lite Annuity Loan Calculator, which is available online and free of charge, you can estimate in advance what monthly charges you will face. The annuity depends on your initial repayment rate, the borrowing rate, the duration of the fixed interest rate and possible special repayments.
In times of low interest rates, a higher repayment rate is recommended so that the term of their financing is not too long. Use the annuity calculator to easily calculate different variants. Take a look at how the increase in your repayment rate from one percent to three percent affects the term and the amount of the annuity. Let Lite advise you whether the annuity loan is suitable for you and what key data you should expect.