Loan maturity is simply the monthly payment that will be reimbursed in the context of a mortgage or consumer credit, here is how to calculate this amount.
A credit that is granted to a borrower will depend on several elements, the duration, the rate, and the amount of financing. These three elements will automatically calculate a due date, also called monthly payment. This is the amount that will be deducted each month from the bank account of the borrower who used the bank to obtain his loan. The amount of the maturity can vary by playing on the rate, the duration, and the amount of the credit, it is, however, necessary to find a happy medium between the need to finance and the capacity to repay.
Defines the deadline according to the need
The first concept to take into account is quite simply the amount of credit that must be financed, most borrowers focus on a need to finance and therefore an amount to be informed in the context of a credit subscription. It can be a large amount, in the context of a mortgage, as a small amount to finance a personal need. This sum will make it possible to define a maximum monthly payment according to the capacity to repay.
From the need to borrowing capacity
The bank advisor who processes a loan request will first take into account the desired amount, he will then check whether this amount can be borrowed and reimbursed under normal conditions by studying the ability to repay of the applicant. It is simply a matter of verifying its debt ratio and its current financial capacity to bear a new charge.
Adjustment with rate and duration
The amount of the credit has been defined, from the moment when the borrower is able to repay the amount taking into account his finances, the bank will then articulate the repayment by playing on the duration and the rates. The principle is simple: the shorter the duration, the lower the rate, and the higher the monthly payment, conversely, the longer the duration, the higher the rate, and the lower the monthly payment. At this stage, it is the borrower who will choose the monthly payment and the corresponding rate, the only limit will be their repayment capacity vis-à-vis the legislation on the debt ratio (maximum 33%).
To obtain an estimate for calculating the loan maturity, it suffices to carry out a mortgage loan or consumer loan to obtain an estimate adjusted to its repayment capacity. It’s fast, simple, and most of all free.