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This is the main difference compared to a standard repayment loan. However, the instalments only remain constant if a fixed interest rate period (fixed interest rate) is agreed for the entire loan term (duration).",[41,42],"content-image",{"align":43,"alt":44,"size":45,"src":46,"provider":47},"right","Annuity repayment - Everything explained at MAXDA","md","\u002Fimages\u002Flegacy\u002Fmaxda\u002Fthemen\u002Fannuitaten-tilgung\u002F02_annuitatentilgung_50p_rechts.jpg","none",[27,49,50],{},"With annuity repayment, the interest portion of each instalment changes monthly in favor of the repayment portion. These two components, the interest portion and the repayment portion, make up the annuity instalment and thus the annuity repayment. At the end of the term, the entire debt is repaid. For such an annuity loan, the interest rate to be paid is set when the contract is concluded. This usually then applies for the agreed interest fixation period. However, that period can also correspond to the entire loan term.",[41,52],{"align":53,"alt":54,"size":55,"src":56,"provider":47},"center","Annuity repayment - The MAXDA guide","lg","\u002Fimages\u002Flegacy\u002Fmaxda\u002Fthemen\u002Fannuitaten-tilgung\u002F03_annuitatentilgung_100p_mittig.jpg",[27,58,59],{},"It is recommended to set the annuity repayment at a minimum of one percent. In this way, the repayment portion is reduced each year by the agreed annual repayment rate until the loan amount is 100 percent repaid. Some providers also allow the annual repayment rate to be varied or changed, so that, in theory, it is possible to repay one percent in the first year, then four or five percent in subsequent years, and then switch back to one percent again.",[41,61],{"align":53,"alt":62,"size":55,"src":63,"provider":47},"Annuity repayment - What to consider","\u002Fimages\u002Flegacy\u002Fmaxda\u002Fthemen\u002Fannuitaten-tilgung\u002F04_anwendungsgebiete_der_annuitatentilgung_100p.jpg",[27,65,66],{},[30,67],{"id":68},"2",[34,70,13],{"id":71},"applications-of-annuity-repayment",[41,73],{"align":74,"alt":75,"size":45,"src":76,"provider":47},"left","Annuity repayment - Application examples of the annuity loan","\u002Fimages\u002Flegacy\u002Fmaxda\u002Fthemen\u002Fannuitaten-tilgung\u002F05_anwendungsgebiete_der_annuitatentilgung_50p_-links.jpg",[27,78,79],{},"Annuity loans are generally private loans that banks provide to their customers. Because the instalment remains constant, they provide borrowers with a solid basis for financial planning.",[27,81,82],{},"Annuity repayment is primarily used in the area of mortgage financing. In Germany, an interest fixation period of five to fifteen years is common. For some providers, this general duration can also be longer. After the interest fixation period ends, the customer has the option to terminate the contract or to negotiate a new interest rate to continue the contract.",[27,84,85,86,89,90,92],{},"Instead of a fixed interest rate, a variable interest rate can also be chosen, which is updated at regular intervals. It should be noted that this interest rate in annuity repayment is often tied to a specific index such as EURIBOR or similar.",[87,88],"br",{},"\nAnother alternative for a variable interest rate is the system mainly used in Spain. In this system, one twelfth of the nominal annual interest rate is paid each month, while the annuity is replaced by constant monthly instalments. Lenders often charge significantly lower interest rates under this system.",[87,91],{},"\nIn 2005 the effective annual interest rate was below three percent. However, the customer also bears a much larger risk, since the nominal annual interest rate can change to the borrower's disadvantage from year to year.",[34,94],{"id":95},"",[27,97,98],{},[30,99],{"id":100},"3",[34,102,16],{"id":103},"types-of-loan-repayment-calculation-of-instalment-repayment",[41,105],{"align":74,"alt":106,"size":45,"src":107,"provider":47},"Annuity repayment - Types of loan repayment","\u002Fimages\u002Flegacy\u002Fmaxda\u002Fthemen\u002Fannuitaten-tilgung\u002F08_art_der_darlehenstilgung_berechnung_der_ratentilgung_50p_links.jpg",[27,109,110,111,113],{},"Loan repayment is generally divided into two types: instalment repayment and annuity repayment. In instalment calculation, the loan is repaid by the borrower to the lender in several equal amounts at equal time intervals.",[87,112],{},"\nThese loans are typically long-term contracts. These equal amounts are called repayment instalments. In instalment repayment, it is assumed that the repayment instalment remains constant for the entire loan period.",[41,115],{"align":43,"alt":106,"size":45,"src":116},"\u002Fimages\u002Flegacy\u002Fmaxda\u002Fthemen\u002Fannuitaten-tilgung\u002F09_art_der_darlehenstilgung_berechnung_der_ratentilgung_50p_rechts.jpg",[27,118,119],{},"The calculation of these instalments is as follows: take the total loan amount and divide it by the term either in years or in months. This yields the following formula: T (repayment instalment) = K (total debt \u002F principal) \u002F n (term). This rather simple calculation is possible because the instalments remain constant.",[121,122,124],"h3",{"id":123},"loan-repayment-through-annuity-repayment","Loan repayment through annuity repayment",[41,126],{"align":74,"alt":127,"size":45,"src":128,"provider":47},"Loan repayment through annuity repayment - What to consider","\u002Fimages\u002Flegacy\u002Fmaxda\u002Fthemen\u002Fannuitaten-tilgung\u002F10_darlehenstilgung_durch_annuitatentilgung_50p_links.jpg",[27,130,131],{},"Annuity repayment works differently. In this case the annuity remains constant over the entire term. The annuity consists of the two components interest rate and repayment rate. Repayment of the loan reduces the outstanding balance of the loan. This steady reduction results in a continuous decrease in interest burden.",[41,133],{"align":43,"alt":134,"size":45,"src":135,"provider":47},"Loan repayment through annuity repayment - The key points","\u002Fimages\u002Flegacy\u002Fmaxda\u002Fthemen\u002Fannuitaten-tilgung\u002F11_darlehenstilgung_durch_annuitatentilgung_50p_rechts.jpg",[27,137,138,139,141],{},"With a constant annuity repayment, the repayment portion increases with each instalment by the amount the interest portion decreases. One can say that the repayment portion increases more the lower the interest rate. Only the final instalment of the entire loan may differ from the previous instalments.",[87,140],{},"\nAnnuity repayment is the more commonly used method in practice because it features constant instalments. However, it should be noted that the overall interest burden over the entire term can be higher. In mortgage financing, annuity repayment is also the preferred lending method.",[34,143],{"id":144},"_1",[27,146,147],{},[30,148],{"id":149},"4",[34,151,19],{"id":152},"mortgage-financing-with-an-annuity-loan",[41,154],{"align":74,"alt":155,"size":156,"src":157,"provider":47},"Annuity loan and mortgage financing","sm","\u002Fimages\u002Flegacy\u002Fmaxda\u002Fthemen\u002Fannuitaten-tilgung\u002F13_immobilienfinanzierung_mit_annuitatendarlehen_30p_links.jpg",[27,159,160],{},"A mortgage loan is a classic example of a loan with annuity repayment. The monthly instalment remains the same throughout the term and, as described above, consists of two components. These two components are agreed in advance when the contract is signed.",[27,162,163,164,166],{},"The standard is a loan with an initial repayment of one percent per annum. This means that for a loan of, for example, EUR 120,000, the monthly repayment instalment would be EUR 100. With an assumed interest rate of five percent, the monthly interest portion would be EUR 500. The total monthly burden would therefore be EUR 600.",[87,165],{},"\nHowever, it should be noted that a one-percent repayment does not mean the loan must be repaid over 100 years. As already mentioned, the outstanding balance decreases with each instalment.",[27,168,169,170,172],{},"In the example given, the initial repayment of EUR 100 in the first month reduces the outstanding balance to EUR 119,900 in the second month. The resulting interest is below EUR 500 and the repayment portion can therefore be increased by this amount, since the monthly instalment remains constant. The repayment in the second month would be EUR 100.42.",[87,171],{},"\nAs the term progresses, this ratio shifts increasingly in favor of the repayment portion. However, with this percentage the term would still be more than thirty years. It is therefore advisable to agree on a higher repayment rate.",[41,174],{"align":53,"alt":175,"size":55,"src":176,"provider":47},"Mortgage financing through an annuity loan - Guide","\u002Fimages\u002Flegacy\u002Fmaxda\u002Fthemen\u002Fannuitaten-tilgung\u002F14_immobilienfinanzierung_mit_annuitatendarlehen_100p_mittig.jpg",[121,178,180],{"id":179},"who-benefits-from-a-loan-with-annuity-repayment","Who benefits from a loan with annuity repayment?",[41,182],{"align":43,"alt":183,"size":45,"src":184,"provider":47},"Annuity loan - who benefits?","\u002Fimages\u002Flegacy\u002Fmaxda\u002Fthemen\u002Fannuitaten-tilgung\u002F15_fur_wen_macht_ein_darlehen_mit_annuitatentilgung_sinn_50p_rechts.jpg",[27,186,187],{},"Annuity repayment makes particular sense for borrowers who intend to use a property for their own purposes. It is also recommended for those who want security in their mortgage financing and do not want to take unnecessary interest rate risks, preferring a steady course for loan repayment.",[27,189,190],{},[191,192,193],"strong",{},"Glossary:",[27,195,196,199],{},[191,197,198],{},"Annuity:"," The word derives from the Latin annus = year. The annuity consists of interest and repayment. An annuity refers to the annually constant repayment in an annuity loan. As the outstanding balance decreases, the interest burden correspondingly decreases and the repayment portion increases by the same amount.",[27,201,202,205],{},[191,203,204],{},"Repayment schedule:"," The repayment schedule contains the shares of interest and repayments according to the agreed due dates.",[27,207,208,209,214],{},"More information about the ",[210,211,213],"a",{"href":212},"\u002Fen\u002Ftopics\u002Frepayment-plan","repayment schedule"," can be found here.",{"title":95,"searchDepth":216,"depth":216,"links":217},2,[218,219,220,221,225,226],{"id":36,"depth":216,"text":10},{"id":71,"depth":216,"text":13},{"id":95,"depth":216,"text":95},{"id":103,"depth":216,"text":16,"children":222},[223],{"id":123,"depth":224,"text":124},3,{"id":144,"depth":216,"text":95},{"id":152,"depth":216,"text":19,"children":227},[228],{"id":179,"depth":224,"text":180},"Meaning, practical examples and calculation 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