How to determine the total cost of a bank loan – APR and TAER

Posted by Admin in Uncategorized | 0 comments

Today I discuss a little business areas and which is linked to insurance – the cost of a bank loan for a mortgage.

What is the APR – Annual Percentage Rate?

The APR includes the costs associated with the loan:

Bank charges
Interest (including Spread)
Cost of Evaluation
Term
These are costs directly associated with the loan.

Example:

Euribor + 2% + 1% Spread Fees and Taxes 0.8% APR = 3.8%

But there are costs not directly associated with the loan, life insurance, health insurance and other related products that the Bank “suggests” to reduce the spread.

In many cases these costs eventually eliminate the effect of reducing the spread.

Hence, the Bank of Portugal has created TAER – Annual Percentage Rate Review – which includes all direct costs and associated with the loan as well as indirect costs (insurance and other products).

Therefore it is advisable to examine the TAE and TAER. If the difference between the TAE and TAER is high, it means that subscribed expensive products (life insurance and multi-risk insurance of high-priced housing or other banking expensive – health insurance, savings with high management costs) .

If you determine that you have insurance with high prices, for example, the law allows him to find the best solution for you.

See the article I wrote about how to get around the obligation to secure the Bank for their housing loans and get to know the procedure for you.