Loan calculator: monthly repayment online

The lender decides, based on your income, your fixed costs and your own contribution. Banks mainly look at the ratio between your monthly repayments and your net income; roughly one third is often quoted as a rule of thumb, but every bank sets its own limit. With this file you work backwards: pick a monthly payment you can carry comfortably, enter a rate and a term, and adjust the loan amount until you land on that payment. In the example, €1,160 per month at 3.5% over twenty years corresponds to €200,000.

The nominal or borrowing rate is the percentage the bank uses to calculate interest on your outstanding capital; that is the figure you enter in this file. The annual percentage rate (APR, called JKP or TAEG in Belgium) expresses the total cost of the credit as a yearly percentage, including file fees, administration fees and the cost of mandatory insurance. According to the FPS Economy all those costs sit in the APR, so you can compare loans regardless of amount and term. Always compare APR with APR, never one lender’s nominal rate with another’s APR.

Multiply your monthly payment by the number of months and subtract the capital borrowed. For €200,000 over twenty years at 3.5% that is 240 × €1,159.92 − €200,000 = €78,381. The same loan over fifteen years costs €57,358 in interest, over twenty-five years €100,374. The term therefore weighs more than many people think: borrowing five years longer costs almost €22,000 extra here, in exchange for a monthly payment that is €159 lower. Always work out the total interest, not just the monthly payment.

Usually yes, especially in the first years, because every extra euro comes straight off the capital and therefore no longer costs interest. In the example, €100 extra per month shortens the term by 26 months and saves €9,413 in interest. Do take the early repayment indemnity into account: for consumer credit it is legally capped at 1% of the capital repaid early (0.5% if less than a year remains), for a mortgage at three months of interest. Also compare the interest saved with what your savings would earn elsewhere.

Because interest is calculated every month on the capital you still owe. In the first month of the example that is €200,000 × 3.5% ÷ 12 = €583.33 of interest; of the €1,159.92 payment, €576.59 is left for capital. Every month the balance drops a little, so the interest falls and the capital share rises. In the last month you pay just €3.37 of interest and €1,156.55 of capital. That is why an extra repayment has the most effect early on, and why refinancing near the end of the term is rarely worth it.