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Annuity (loan instalment)
KrediteErwachsene
The fixed monthly loan instalment, made up of interest and repayment. The interest share falls over time, the repayment share rises – the instalment stays the same.
The annuity (Annuität) is a constant loan instalment – you pay the same amount every month. What changes is the composition: at the beginning the instalment consists mainly of interest, at the end mainly of repayment.
Example: €200,000, 3.5% interest, 2% repayment = annuity of €917/month.
• Month 1: €583 interest + €333 repayment
• Month 120 (after 10 years): €450 interest + €467 repayment
• The instalment always stays €917
Annuity loans are the standard for mortgages in Germany – a predictable, constant burden over the entire fixed-rate period.
Did you know? The oldest known life annuity contract – a forerunner of modern annuities – was concluded in 1308 between the abbot of St. Denis and the archbishop of Bremen.
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