![]() ![]() The share of interest is higher at the beginning of the loan term, but it declines as the loan balance decreases. Loan payment schedule/Amortization schedule: each loan payment consists of two parts: part interest and part of the repayment of the principal. This kind of loan construction is called an amortized loan. In most cases the borrowed money is refunded in loan payments (installments) in equal amounts through the payment term. Loan payment: this is the amount of money which is required to be repaid by the borrower for every payment period. For example, in the case of a monthly payment with a 6% annual rate, the periodic interest rate is equal to 6% / 12 = 0.5%. To get the periodic interest rate, you need to divide the annual rate by the number of payments in a year. For example, a bank might charge 2% per month on its credit card loans, or it might charge 1% quarterly on loans. It can be annual (in this case, it equals the annual rate), semiannual, per quarter, per month, per day, or per any other time interval. Periodic rate: this is the interest rate charged by a lender or paid by a borrower in each payment period. Payment period: it refers to the specific period over which the borrower is obliged to make the loan payments. For example, a 20-year fixed-rate mortgage has a term of 20 years mortgage calculator. Payment term: in our context, refers to the time frame the loan will last if you only make the required minimum payments each month. To learn more about inflation, visit our inflation calculator. It is also important to take into account the expected inflation rate when you inspect a quoted rate: the higher the inflation rate, the lower the real interest rate thus, the real burden generated by the interest rate lessens. If you would like to learn more about calculating interest, visit our simple interest calculator.Īnnual rate: this is the interest rate (also called nominal rate or quoted rate) that is quoted by banks (or other parties). In other words, this is the amount that the borrower agrees to pay the lender when the loan becomes due, not including interest. Loan amount: this is the amount of money (also known as the principal) that a bank (or any other financial institution) lends or, conversely, that an individual borrows. In the following, you can get familiar with these phrases so you will have more of an understanding of the concept of loans. If you have family who would like to assist you to buy your first home, this can be helpful if you’re able to meet the repayments on a home loan, but don’t have the bank deposit.Before we go any further, it is essential to discuss a few specific terms you may encounter when you are considering taking a loan. Read more about government help for home buyers Getting help from friends and family You may be able to get government help to buy your first home if you're a KiwiSaver member, purchasing in certain areas, want to buy a house owned by K āinga Ora or are Māori and want to live on your ancestral land. ![]() Read more about mortgages Government help to buy your first home To work out your potential costs when taking out a mortgage, use the mortgage calculator above. A mortgage agreement can take years or even decades to pay off. In return, you pay the bank or lender interest on the amount of money you have borrowed over the period of the mortgage. ![]() The home loan is secured by that property.Ī mortgage can help you buy a home sooner than if you were to save for the full price. Read more about conditional pre-approval Your mortgageĪ mortgage (or “home loan”) is money borrowed from a bank or other lender to buy a property. Conditional pre-approval lets you know the price range you can buy in. It’s a good idea to have conditional pre-approved finance arranged with your chosen lender before you start looking at property to buy. Read more about saving a bank deposit Conditional pre-approval Most lenders require first home buyers to have a deposit of at least 20% of the amount you are borrowing. The bank deposit is the initial money you’ll need if you borrow money from a bank or other lender to purchase a property. Calculations are based on the interest rate selected being constant for the entire term of the loan. Actual loan repayment amounts may vary slightly due to rounding. Calculations are based on a table repayments term loan. All amounts entered by you are assumed not to vary and are valid only at the time of entry. This calculator is intended as a guide/illustration only. ![]()
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