Few can buy a property for cash at today’s home prices.
Most people take home loans along with their own resources. Before taking out a home loan, everyone calculates how much credit the banks would give him based on his income. The home loan calculator can help you choose a home loan. But why use a credit calculator? Because it can help you find the best home loan quickly and easily. There is no obligation to use the calculator. All you have to do is enter your details, and then the system will provide you with a list of credit institutions where you may be eligible for a home loan. After that, all you have to do is pick one. The three most important things people will look at when calculating are the interest rate on the loan, the APR, and the installment. What is the Ideal Installment for a Home Loan? Now you can find out.
When you take out a home loan,
Income and real estate collateral are decisive for the loan amount, because they determine how much you can borrow. An important factor is the (Income Proportional Rate Indicator) limit, which shows you how much of your income can be used to pay off your loan at most. According to the law, in the case of a home loan, the repayment installment may not be higher than 25% of the monthly net salary, below 400 thousand HUF, and in case of income above 30%. And for mortgages with a fixed repayment period of five to ten years, the limits are 35% and 40%, respectively. The 50 and 60% limits apply only to fixed mortgage loans for a minimum period of ten years or until the end of the term. As of July 1, 2019, the decree allows for a monthly income of HUF 500,000 instead of the current $ 400,000. Another important factor is the loan-to-value ratio, which shows how much credit a bank can give relative to the market value of the underlying property.
It is worth considering the rule sensibly, as you may not be lucky enough to maximize your income accordingly. Mainly because he is committed to a bank with a home loan for decades and does not know what the future will bring. Only take out a loan that you can repay in the long run.
You need to determine the household’s monthly income
Before you embark on a home loan, you need to determine the household’s monthly income, which is the basis for managing all your monthly expenses, including your repayment. You should also write down your monthly income or expenses, ie what you spend on an average month. Expenditure, unlike income, may vary from month to month, so it’s a good idea to consider occasional expenses as well as regular expenses.
Expenditures include some that are nearly the same each month (overhead, food, transport, etc.). There are also unexpected expenses (doctor, medicine, etc.) that do not occur every month, but it is worth calculating with them. The other category includes all other monthly spending (culture, entertainment, clothing, furnishings, etc.). We do not recommend that you completely eliminate these expenses, but think about what you might be able to save so that your family’s comfort is not damaged.
The most important aspect when determining the repayment term is whether the interest rate of the loan can change and at what intervals, as this clearly means an increase in the repayment rate. There are home loans for which the installment is fixed throughout the term. For others, interest rates may change every 3, 5, 10, or even 15 years, between interest periods. There are loans linked to a benchmark, where the change in the benchmark value also implies a change in the interest rate on the loan. For example, the interest rate on a 12-month BUBOR loan will change every 12 months according to the change in that indicator.
Fixed rate loans are the most predictable,
As here the repayment term does not change until the end of the term. It is not worth spending the entire amount of your family’s income on loan repayments. It is recommended that you spend 80% of your free money on a fixed rate loan and 60% on a variable rate loan until the end of the term. It is advisable to count this at 60-80% because an unexpected higher expense can occur at any time (in case of unemployment, maintaining a family, changing cars, changing household appliances, illness, etc.)
If you opt for a floating rate loan, you can expect an increase in interest rates at the end of the interest period. We do not know how mortgage rates will change in the future. Even with some interest rate increases, the above 60% loan repayment rate may remain monthly.