It’s an Easy Way to Understand Kinds and How to Calculate KPR Interest
You all must know what is a mortgage. Yes, the mortgage is the Home Ownership Credit granted by the bank to you who applied for credit for the purchase of the house.
The language is simple, the approval of the mortgage is itself given based on the bank’s assessment of your financial ability. Up here, most people must understand. But do you know about the types and ways of calculating mortgage interest?
Consider also: Here are 5 Factors That Make Your KPR Approved
Well, if this time you want to buy a home mortgage then it’s good desain rumah minimalis if you understand and pay attention to the type and way of calculating the interest because it will determine the size of the installment. Check out the guides.
In determining mortgage interest, the Bank uses fixed interest or floating interest.
This means that credit interest may change at any time during the credit term. With floating interest, the amount of interest you have to pay can vary according to the interest rate set by the bank.
If the interest agreed at the beginning of the agreement is 8%, then during the period of interest credit may fall to 7% or even rise to 12%. Generally, banks set the floating interest rate each month.
In the event of a change in interest rate, the bank will inform you in writing. Floating interest itself is set following market interest conditions. If the market interest changes, the floating rate of KPR will change.
Fixed Interest (fixed)
With fixed interest, you will pay the same amount of interest for the duration of the contract. If at the time of the credit agreement has been set at 10% interest, then for a fixed period of time the fixed interest rate remains 10%.
In other words, if using a fixed rate, any change in market interest will not affect the amount of interest on the loan. But in practice, banks usually use fixed interest rates in the first one to five year mortgage loan only.
After the fixed interest period, the bank will return to a floating interest following the prevailing market rate. This method of determining the interest that is commonly used in almost all mortgage products in the bank.
In general there are 2 methods of calculating mortgage interest, which is effective and flat.
The Bank calculates interest based on the loan balance of the previous month. The interest is the multiplication of the interest rate with the remaining principal.
Because every month the principal balance will decrease along with the installment payments, then in the effective method you will pay the amount of interest continues to decline each month.
It’s called an effective method because basically you as the debtor pay interest only on the remaining loan that is still owned and not pay interest on the basis of the loan ceiling.
The effective method is modified by the annuity method which regulates so that the principal amount of the principal and interest paid are always the same every month.
In the installment payment there is a component of interest and principal, where annuity method of payment of principal and interest will be adjusted in such a way that the total amount of installment payments remains the same every month.
The portion of the decreased interest payments will be offset against an increase in the portion of basic payments. Usually the Bank has a software application that automatically calculates interest annuities.
The Bank calculates interest based on the original principal, not on the remaining debtor’s loan. With this method, you pay the same amount of interest every month because the principal of the loan as the multiplier factor (ceiling) of interest does not change.
This is different from the effective method by which the amount of interest decreases each month in line with the reduced loan balance.
The total amount of payments of principal and interest per month is the same. Similarly, the portion of the principal and the portion of interest in total monthly installments are unchanged.
Finally you need to understand, the method of interest calculation will affect the size of the interest installment that you have to pay as a debtor on the credit provided by the bank.