Knowing how to calculate the ideal monthly payment for your mortgage is not an easy thing. Here are tips to help you properly define the amount of monthly repayment of your loan. You will be able to calculate how to optimize the cost of your mortgage while maintaining a reasonable debt capacity.
Calculation of a loan payment: why is it important?
The monthly payment is the central element of your mortgage. By setting too low monthly payments, you will certainly have greater financial freedom in everyday life, but your loan will cost you very expensive. Conversely, by taking out a loan with excessive repayment payments, you put yourself financially at risk and compromise your future. The use of the payday loans come very important here.
The calculation of its borrowing monthly is therefore very important. It should take a few minutes to take stock of his finances and calculate the monthly payment adapted to your situation. Here are 10 tips for calculating your monthly payments and making the right choice. These tips are just a small glimpse of the ones you will find in our guide “Take charge of your mortgage”.
To find out the amount of the monthly payments that you will have to pay according to the amount of your mortgage and the interest rate obtained, use our monthly payment calculator.
- Define your regular cash flow
The first thing to do is to accurately calculate all your regular cash receipts to determine what your monthly income is. This calculation will be based on your monthly net wages but also on your other sources of income (rental income, income from your investments, social benefits such as family allowances, alimony, etc.) Be careful if a part of your income is variable to not count it as acquired in its entirety. You must estimate an average over this variable part over at least 10 years.
- Calculate your current debt ratio
Calculating the monthly payments of all your current loans will be the first thing a banker does. You have to list all the consumer loans, car loans, mortgages you are currently paying. As a general rule, banks will check that your monthly mortgage payment plus the monthly payments of all these other credits do not exceed 33% of your income. We will see that this limit is not an obligation but a good benchmark.
- Take stock of your fixed expenses
Housing is not your only expense: food, health, car, insurance, taxes, etc. The money outflows are numerous. Try to make an estimate, as accurate as possible, of your fixed expenses. Do not forget to include in this calculation all the monthly payments of the other loans that you still have to repay.
- Do not forget to be able to please you
Aside from the fixed expenses of eeryday life, we must not forget to keep part of its budget at pleasure expenses. The purchase of your house or apartment should not stop you from living. Define how much of your income you want to keep for your holidays, hobbies, etc. While this may seem obvious at first glance, it is not uncommon to see families not go on vacation and / or no longer be able to afford superfluous pleasures because of high monthly payments for your home.