The mortgages differ from each other in the parameter taken as a reference: for the variable in general one takes the 1-month Euribor or the 3-month Euribor for mortgages that have a monthly or 6-month maturity for mortgages that they have a six-month maturity. For fixed assets, the Irs is taken as a reference at 5, 10 years and so on (the longer the duration, the higher the rate).
Which consists of a percentage
At this basic cost is added the spread in favor of the bank, which consists of a percentage (on average between i and 1.5 per cent) that repays the costs of collection and gives a remuneration to the institute.
Then there is a whole series of expenses that the loan contractor has to pay.
These are divided into initial expenses (preliminary investigation costs, property value assessment and insurance) and administrative expenses (installment collection, annual management fee). The insurance companies, in particular, are of two types: life insurance, to ensure that the heirs pay the rest of the installments in the worst case scenario; fire insurance to prevent the asset from burning out before it is finished paying.
Compare the mutual convenience of two or more mortgages
In the past it was extremely difficult to compare the mutual convenience of two or more mortgages. In fact one had a lower spread but higher expenses, another had a monthly repayment (which should cost less) and another a semi-annual repayment, another still lower expenses but spread and higher parameter.
Financial calculation experts
Comparing all these variable items was practically impossible if not for financial calculation experts who had a little time to spare. For some years, however, the comparison has become easy, indeed very easy, thanks to Costp’s Synthetic Indicator (Isc), which all banks must provide for each loan. The ISC is expressed as a percentage and indicates the total cost of the loan, because it includes the repayment of the capital, the payment of interest and all the expenses.