How is the monthly instalment on a property loan calculated?
Before you make a financing decision, three figures should be clear: how high is the monthly instalment? How long will I be paying? And what does the loan cost me in total? With the calculator below all three questions can be answered in seconds — on the basis of the loan amount, the nominal interest rate and the initial repayment rate.
Financing Calculator
Compare: 1 %, 2 % or 3 % repayment
Based on your inputs above — the row matching your current repayment rate is highlighted.
| Repayment | Monthly instalment | Term | Total interest |
|---|---|---|---|
| 1 % | 900 € | approx. 43 yrs | 225.300 € |
| 2 % | 1.100 € | approx. 29 yrs | 142.800 € |
| 3 % | 1.300 € | approx. 22 yrs | 105.800 € |
Tax note: Non-binding guidance, without warranty – not a substitute for tax advice.
Interest rate vs. repayment rate – what makes the difference?
Many buyers focus on the interest rate — yet the repayment rate is at least as decisive for the total cost of the financing.
| Scenario | Loan | Interest | Repayment | Monthly instalment | Term | Total interest burden |
|---|---|---|---|---|---|---|
| Low repayment | 240,000 € | 3.5 % | 1 % | 900 € | approx. 43 yrs | approx. 225,000 € |
| Medium repayment | 240,000 € | 3.5 % | 2 % | 1,100 € | approx. 29 yrs | approx. 142,000 € |
| High repayment | 240,000 € | 3.5 % | 3 % | 1,300 € | approx. 22 yrs | approx. 105,000 € |
The difference between 1 percent and 3 percent initial repayment: you pay 400 € more a month — but in return around 120,000 € less in interest over the entire term. The higher repayment therefore pays off in almost every case, provided your liquidity allows it.
How long will I be paying?
The term of an annuity loan can be calculated precisely — and often comes as a surprise. At just 1 percent initial repayment and 3.5 percent interest, full repayment takes around 43 years. That is not a financing error but mathematics: in the early years the bulk of the instalment goes into interest, and only a small part repays the loan. Only once the remaining debt has fallen noticeably does the repayment share begin to dominate.
Why does it take so long? The term depends on the ratio of interest to repayment: the closer the initial repayment is to the interest rate, the longer the loan runs. At 3.5 percent interest, 1 percent repayment means around 43 years, 2 percent repayment around 29 years and 3 percent repayment only about 22 years. A reliable figure, however, comes only from the exact calculation with the calculator above — simple percentage rules of thumb underestimate the term because they ignore compound interest.
When is a higher repayment worthwhile?
Almost always — when liquidity allows it. Three arguments:
- Reducing the interest burden: every euro repaid earlier pays no more interest in the future. At 3.5 percent interest, every additionally repaid euro saves around 1 € of interest over 20 years.
- Reducing interest-rate-change risk: the higher the initial repayment, the less remaining debt is left when the fixed-interest period expires. With sharply risen rates, a high remaining debt can become a burden.
- The psychological component: anyone with a foreseeable term (e.g. debt-free at retirement) can carry the financing more calmly than someone with an open 40-year term.
For investors there is an additional aspect: a lower repayment preserves more liquidity for further investments. Whether that makes sense depends on whether the expected return on further investments is above the financing interest rate — the marginal view of this is shown by the return-on-equity calculator.
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