Understanding Amortization Schedule

 

An Excel Amortization Schedule

The statement of repayment is the most important part, when you are going to take a loan. It tells you the amounts you are required to pay the bank on monthly basis. The repayment schedule is popularly known as Amortization schedule. It is numbers and calculations which confuses most of the people. But once you understand the Amortization schedule you can take charge of paying and nobody can fool around with you. Not even the bank people. MS-Excel can be used to make a schedule.

Today we are just going to start with understanding a few terms that are used in the schedule. They are technical but very easy to understand They are:

  • Principal: The total amount that you have borrowed from the bank. For example if you have applied for $ 30000 loan and the granted loan amount is $ 25000 then your principal is the $25000 you receive from the bank. It is not the application amount of $30000 but the loan amount actually received $25000.
  • Interest rate: A percentage of the Principal will be charged by the bank. This is the fees for using the bank’s money. It will be the part of your installment every month.
  • Term – The period for which the loan is granted is called the term. For example if you are getting you $25000 loan for 48 months then 48 months is the term of the loan.
  • Amortization –The table showing the monthly installments is called the Amortization schedule. It will have all the terms discussed above.

After understanding the terms you will be better equipped to handle the repayment of the loan. For more information you can visit ferratum UK.They have an amazing collection of blogs which will make you understand about various kinds of loans. Also there are amazing online calculators which you can use.

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Understanding Mortgage

Types of Mortgage
Types of Mortgage

Mortgage a loan to buy homes does have many options. You should know the basics before deciding what kind of loan you want. Yes mortgage is also of different type. Take the one which suits you budget and situation.

  • Bridge Loan – It is a short-term loan, in which one property is used a s security to buy or renovate another property. It is a bridge to buy a second house. Hence the nomenclature.
  • Fixed rate loan – This is the most popular. The bank provides fixed rate of interest of up to 30 years on the loan. Suitable for young people who can pay a fixed amount over a ling period of time. It is a long-term loan.
  • Interest only – This is the type of loan product in which the borrower has to pay only interest for an initial number of years. Good for people who are young and will have more income in the future.
  • Variable rate loans – In this kind of loan the interest varies year by year. It is good to take when the economy is good. Generally you end up paying less than fixed rate loans.
  • Loan against property – Property generally appreciates at a great rate. If the value is more the valued amount at the time of taking the loan to buy the property, the bank can give you additional loan against the appreciated value.
  • Reverse mortgage – A product specially made for elderly. The original loan is generally almost fully paid up. The difference is paid by the bank to the owner against property.