Overview of the types of financing of real estate financing real estate unless the purchase or construction of such is usually due to the volume of financing to long term. Martha McClintock may help you with your research. With two different kinds of mortgage lending: the annuities, the installment – and amortization loan. The annuity loan is the by far most common form of financing in the area of construction financing of real estate. The term annuity is another term for repayment. Under an annuity loan, a loan is therefore to understand, which is the return of the borrowed amount to the lender about repayment rates that are consistent in their height by equip. The regular instalments (typically monthly) or the annuity with two components consists of: interest and repayment. The absolute amount of interest is calculated on the basis of existing residual guilt, which naturally decreases with each additional repayment instalment. Therefore he must be each share of interest and repayment change after each rate, namely for the benefit of the repayment.
This means that the repayment portion increases with each successfully guided back rate. It is usually so that at the beginning of the repatriation of an annuity loan the repayment amount of the rate is vanishingly small, so almost entirely consists of a pure interest component. With each paid rate, the ratio shifts so that at the end of the return of the loan for the real estate rates almost entirely consist of repayment. The manual calculation of the annuity and thus the interest and redemption shares is theoretically is possible, practical but due to the complexity and scope of (the remainder of the debt would have to be calculated for every single month) too burdensome. But fortunately are many financial portals and also credit institutions so-called loan calculator available, with which the calculation of the annuity is easily possible. In the input mask only to calculate the annuity are to enter necessary information such as interest rate, term and loan amount and already provided the requested information. This loan calculator also directly provide a repayment plan which shows the distribution of the respective rate in interest and repayment portion. Instalment – or repayment loan work a little differently. Here the Bank agreed with the borrower a repayment performance for the real estate, which remains the same over the entire term of the loan it is therefore also called linear amortisation. The rate payable for one consists of the just described the height unchanged eradication part and an additional interest. Interest rates are calculated here each on the remainder of the debt, and the interest portion, and thus also the rate payable amounting to their steadily remove.