How mortgage simulators work

A mortgage simulator is a special type of calculation tool designed to calculate the cost of mortgage installments . It includes different parameters to show in a simple way the interest rates, amortizations and capital of a mortgage loan that is requested to buy a home.

When we use a mortgage simulator we can have better control over our expenses, knowing in advance how much money we will have to spend and managing each situation to request a loan at the bank that is most convenient and at the right time. Since there are different variables that must be taken into account, a certain time of the year or the economy may be more accessible in one bank than in another.

Depending on the type of mortgage simulator, we will find different variables to enter. There are also mortgage simulators designed by banks. The mortgage simulator BBVA, mortgage simulator La Caixa and Santander mortgage simulator, among others. It is important to compare the data in all the possible simulators, in this way you will have a broad idea about the possibilities you have before obtaining your own mortgage loans.

Variables in mortgage simulators

Depending on the complexity of the tool, you can find a mortgage simulator that includes calculation parameters such as:

  • Amount requested (it is usually considered a percentage of the total cost of housing)
  • Duration of the loan (number of years in which we will repay the loan)
  • Monthly fee (amount payable with interest from the signing of the contract)
  • Value of the home (in legal currency of the country where the transaction is made)
  • Interest rate (specification of the interest rate applied to the loan)

Complex or simple mortgage simulator

When we try to know more details about a mortgage loan we use specific tools. However, there are simpler mortgage simulators and more complex ones. The difference lies in the number of variables and calculations made by each software.

In a simple mortgage simulator we can make changes in the term or duration of the mortgage to see increases or decreases in the monthly fee. This way we can adapt our mortgage loan to the income that we have in our family. This type of simulators tend to work with a fixed interest rate. On the other hand, there are not many financial institutions that grant loans when the quota of a mortgage exceeds 30% of the family income, so keep this in mind when planning your mortgage.

In the case of a complex mortgage simulator, we will find a greater number of data and variables to modify. This type of simulators are more complete, but at the same time they present a greater difficulty because there are parameters that we may not know. They can calculate banks' differential, present graphs with the temporary evolution of interest, include mortgage signature expenses, amortization tables and more.

When you start thinking about a mortgage loan, a mortgage simulator can help you to have a clear and concise idea about the expenses that we will have to pay for. You can ask for help from an accountant or finance expert to get even more out of the simulators.