First, remember that the fee, that amount that you pay to your bank each month, depends on:
- The amount of borrowed capital: the money we borrow to buy a house. For example, 150,000 euros.
- The interest rate: the price we pay for the mortgage. The interest rate at which a mortgage is contracted is usually fixed or variable, although sometimes it can also be mixed. In the case of variable and mixed mortgages, the interest rate of the loan remains linked to an external index (generally the Euribor).
Review of the installment to pay for the mortgage
The review of a mortgage consists of updating the value of the reference index to which a mortgage loan is subject.
Review of fixed mortgages
If your mortgage is fixed interest, you will not see any change in the installment throughout the life of the loan.
Review of variable mortgages
In the case of variable-rate mortgages, this interest is made up of two parts: the reference index (Euribor) and the spread. This means that the monthly fee will vary depending on the evolution of the Euribor.
When is the mortgage payment reviewed?
A review of the mortgage is usually annual, although it can also be semi-annual, depending on what is stated in the contract of your mortgage loan. Your mortgage contract must include the established date for the start of the amortization process and, consequently, the subsequent review dates. This can coincide with the moment in which the loan was formalized (any day of the month) or be the first day of the calendar month following the one in which the operation was formalized. So you will always know when your mortgage payment will be updated.
Thus, in the mortgage the reference date of the Euribor is indicated to take into account in the review, for example, the value of the Euribor for the month of November, although the review does not apply until January and that value will apply for the following twelve months. until the next review (in the case of the six-monthly review, two dates are set).
How is the mortgage review carried out?
After reviewing the interest rate of the variable mortgage, the monthly installment that you will have to pay for the following 12 months is calculated based on the new Euribor, the differential that you have contracted, the capital of the pending loan and the time left to finish the mortgage.
The monthly fee you have to pay may have increased or decreased as a result of changes in the Euribor. A rise in interest rates (Euribor) implies an increase in the installment to be paid on the mortgage after its revision, while a drop in the Euribor will mean that the installment is reduced. Since February 2016, the Euribor has been in negative territory, which has eased the mortgage burden of many families.
The review of your mortgage will be done automatically by your entity, without having to go to any office or do any online procedures.
How to calculate the new installment of my mortgage
Mortgage installment simulators
This year Bankinter has launched a new mortgage calculator (simulator) that allows you to find out how your mortgage payment will change so that you are informed and better plan your finances. Bankinter’s mortgage review calculator can be useful for calculating the new installments based on the evolution of the Euribor. Discover all the details.
Calculation of the review of mortgage payments with Excel
Most simulators allow you to download the result in Excel. But if what you want is to create your review of the mortgage payments in your Excel in which to work, it is also possible, and it is also quite simple. You just have to follow the following steps:
Step 1. In column A we will put the following sections:
- Outstanding principal: the amount of the loan that you have left to repay.
- Pending term: we write the number of years that we have left on the mortgage.
- Rate: we take the Euribor of the previous month as a reference and add our contracted differential.
- Quota: here we will calculate the quota for the following twelve months, as indicated in step 2.
Step 2. In column B we complete the previous data and, in installment, we put the following formula: =-PAYMENT(B3/12;B2*12;B1)
In the case of semi-annual reviews, this same formula would apply, since we would be calculating the fee per month. The difference between an annual and semi-annual review is the frequency with which this calculation is made and the quotas are updated.
