Tuesday, 14 February 2017

Mortgage Interest

Mortgage Interest

Mortgage interest (loan) interest is given to the borrower or the price paid by the customer to the bank's borrowers.

The main factors affecting the determination of the seriousness of the huge credit interest rates are as follows:

The needs of funds

If the shortage of funds, while the bank loan applications are rising, then conducted the bank in order for the funds quickly met with increasing interest rates on deposits. Increased interest rates on deposits will automatically increase lender interest.


Contested funds are deposits, then in addition to the promotional factor, most major banking parties should pay attention to the competitors. 

The wisdom of the Government

Interest loans should not exceed the interest that has been set by the Government.

The desired profit target

In accordance with the profit target is desirable, if the desired profit then joined a large loan interest and vice versa.

Period of time

The loan period is getting longer, it will be the higher the interest. This is due to the magnitude of the likely future risk. So conversely, if short-term loans, then interest rates are relatively low.

Quality assurance

The more liquid the guarantees given, then the lower credit interest charged and vice versa.
Reputation of the company.

A company which will acquire credit largely determine the interest rate that would be charged later, because usually a companies the possibility of future bad credit risks are relatively small and vice versa.

Competitive products

Competitive products are products that are paid and sold in the market. for products competitive, interest credit given relatively low if compared with the products less competitive.

Good relations

The Bank classifies its customers between customer main (primary) and regular clients (secondary) digging this is based on customers ' loyalty and the liveliness of the concerned banks. the customer usually has a good relationship with the bank, so that in the determination of any interest tribe in contrast to regular clients.

Third-party assurance

In this case the parties give assurance to recipients of credit. Usually if the parties give assurance of reliability both in terms of ability to pay, good name as well as his loyalties towards the bank, then the interest even burdened are also different. So island Conversely, if third-party guarantor less bona side or not credible, then it may not be used as a third-party guarantee by the banking.

Big nothingness to determine special rates for credit to be given to the debtor, there are several components that affected it. As for the component in determining the interest rates of credit include:

1.    The total cost of funds (cost of fund)

Is the total interest incurred by the bank to obtain funds or deposits in the form of checking, savings or deposits.

2.    Operating costs

In conducting any activity the bank requires a range of good facilities and infrastructure in the form of humans or tools. The use of the infrastructure requires a number of costs that should be borne by the banks as operating costs. These costs consist of the costs of salaries, costs administration, maintenance costs and other expenses.

3.    The risk of bad debts reserve

Is a backup against the traffic-jammed credit will be given, this is due to any credit given definitely contains risks don't pay off. This risk can arise either intentional or unintentional. Therefore the bank needs to be backing them up as attitude stationed to deal with it by way of charge it a number of certain percentage against the credit disbursed.

4.    The desired profit

Every time you make a transaction by the bank is always looking to gain maximum profit. This determination specified some important considerations, given the determination of the magnitude of profit greatly affect the magnitude of the mortgage interest.

5.    Tax

Tax is charged by the Government's obligations to the bank that provides credit facilities to customers

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