Virtually all banks have a mortgage credit simulator. How do they work?
Technology facilitates people’s lives in many ways. For example, not having to go to a bank office, make time while you are served, and then wait a couple of days to receive an offer for a mortgage loan. Now, with a credit simulator, you have the information in seconds.
How credit simulators work
The digital development of financial companies is very advanced. All user information is digitized, all operations are recorded in real time in “one system”.
Mortgage loans could not be left out of the technological era.
The web pages, the portals of the banks, offer the possibility of calculating in seconds a mortgage loan.
Each bank uses a different form model. In general, you can ask:
- Property Value: This information is important for one reason: to verify that the amount of credit you want to request is within the range allowed by law, maximum 90% of the value of the property.
- Value of the initial fee: The question is asked to allow a free choice. It does not always have to be 10% of the value of the property, it can be more money.
- Credit value or amount: This data is key to the formula.
- Term: It’s about the time you want to pay the debt, 15, 20, 10 years?
- Currency: You must choose between dollars or soles.
- Lien and risk insurance: This question is very important. You can decide to take insurance with your broker or do it through the bank. If you do it with the bank, the cost will be reflected in the Annual Effective Cost Rate (TCEA).
- Your personal information. The form collects the information necessary to process the formulas that calculate how the loan will behave over time, that is, how you will pay the principal and interest .
- The credit simulator calculates the interest rate, according to the rate that the bank applies at that time for the amount of credit you are requesting.
- Then calculate the value of the loan over time.
- The result that shows you is the value of the monthly fee.
- You can also see the full schedule.
What decisions can you make with the credit simulator?
Suppose the credit simulator gives you a lower down payment than you expected. You could pay more.
- In that case, it is worth trying to change one of the variables, time, for example.
Paying in less time is equivalent to a slightly higher monthly fee, and less interest in the total credit. You can see the effect of changing this variable as well. Initially ask the credit simulator for the calculation at 20 years and then at 18 years. You will see that the total credit value will be lower, because you will not pay interest for two years.
Now, suppose the quota is higher than your expectations:
- Modify the value of the property and the value of the credit to request. Request less money.
- Extend the deadline, ask for more time
You can modify the variables as many times as you need until you find the quota that best suits your needs.
What is the simulator for
The mortgage credit simulator gives you a clear idea of the credit behavior. However, the data is not definitive. Other factors that the bank must consider before approving the credit are missing, such as your credit history, the time you ask for the credit (the rate may have changed since you studied the matter in the simulator) or insurance.
Therefore, the simulator does not compromise either the bank or you. It is only general information.
Finally, simulators are useful for comparison. You could tell which bank is lending at a lower rate. The important thing to be able to make a good comparison is to repeat the same information on each form.
Now, since the simulator is only as an information, when you really want to quote, you should do so directly in each office or through the portal.
If you don’t have time, we help you get the best deals for your mortgage credit. Simulate your mortgage credit options here.