Interest rate / rate - bank calculation

Hello,

I have a question: I already had a conversation with Interhyp (however, before this change in the credit guidelines) and recently with a builder. It was about the amount of the installment, what amount of the installment is acceptable for the bank. We somehow ended up with an installment around 1400 euros and the house provider said the bank would somehow assume that interest rates could rise to X and this installment would then also have to fit the income situation. He also mentioned something about Basel 3 and that the installment would then be somehow a bit over 2000 euros. Now my question is, is there some kind of formula or similar by which this is calculated? All the calculators with which I supposedly can calculate the "budget" for myself somehow give very high amounts partly, so that I don't really believe that the bank would go along with something like that.

oh dear, a home builder playing the bank....

All the calculators are set up so that you find out your maximum loan amount including the installment. Of course, it is a fictional calculation. Some, like you, then say "Wow, that's a high installment and a high loan, I can't manage that."

That's why you should pick up the phone and make an appointment with your house bank. They will tell you up to which loan amount you could finance.

I don't quite understand the answer? Because the home builder says, if I say, for example, I want to make a 1400 euro installment, then the bank checks whether I could also, for example, afford 2200 euros, in case the interest rates rise. So it would actually be the other way around, the home builder claims that the bank checks if there is still room/security in the household budget. So it assumes a significantly higher installment (which I don't actually pay, but only have to be able to afford).

Hello,

I hope I have understood the whole thing correctly *scratches head*

If the interest rates on your financing increase in year X, the installment is not simply adjusted (raised). Normally, you then continue financing after the fixed interest period expires (or after 10 years) and to reach your intended term from day 0, you would have to pay more monthly. But if you can’t afford that, the term is simply longer.

I hope I have understood your question and the whole thing correctly

Regards

I don't quite understand the answer? Because the home builder says, for example, if I say I want to make a 1400 euro installment, then the bank checks whether I could also afford, for example, 2200 euros, in case the interest rates rise.

Yes exactly, the bank checks whether you can still afford the loan if there is an interest rate adjustment after the fixed interest period. So to speak, an "interest rate shock" upwards. I assume you will not have a full repayment loan but still have a residual debt. Likewise, according to the new EU directives, the bank must check the income so that if you become a pensioner during the repayment of the loan, you can still afford it with the lower (pension) income.

It is therefore a term/lifecycle consideration.

But don't worry about that, you certainly have an idea of the installment and loan amount, right? You are not building exactly as the bank dictates.

And no, there is no formula because the law does not specify an exact rule and the banks themselves do not even agree on which fictional future interest rate to use.