I’ve asked several bankers to explain to me the different loan types (Annuiteettilyhennys, Tasalyhennys, and Kiinteä tasaerä) but all fumble hard while trying to clarify what they are and what are the differences.
I’ve found explanations here [https://www.s-pankki.fi/fi/lainat-ja-luotot/s-asuntolaina/](https://www.s-pankki.fi/fi/lainat-ja-luotot/s-asuntolaina/) and [https://www.youtube.com/watch?v=2sTJu–3Ja8&ab\_channel=SiberianGoneInternational](https://www.youtube.com/watch?v=2sTJu–3Ja8&ab_channel=SiberianGoneInternational) but honestly they weren’t as helpful since I’m as dense as a rock. Can anyone explain these to me like I’m 5?
3 comments
Kiinteä tasaerä = you pay back exactly same amount every month, and loan time varies when intrest rate changes. “Constant total monthly payment”
Tasalyhennys = the amount you pay back is same month so loan time stays constant, but amount of intrest paid every month changes when intrest rate changes. In case of tasalyhennys, total payments will also gradually get smaller as total loan amount and thus intrest decreases. “Constant loan time”
Annuiteetti = like tasalyhennys, but loan payment increases over time as the amount of intrest you need to pay decreases, so total payment stays approximately same. Loan time stays constant like it does in tasalyhennys, but total payment amount doesn’t decrease over time. This means the loan will be paid faster. “Constant loan time and fastest loan payback”
Simply put: if you are worried about increasing intrest rates, choose tasaerä. If you believe you can afford rising monthly payments when intrest rate goes up, choose annuiteetti.
I have never understood the point of tasalyhennys…
Annuiteetti. Your loan is initally scheduled and balanced in a way that you would pay the same monthly amount until the whole loan is paid. In practice your monthly payment is less of the loan in the beginning, and more of the interest (because you start from paying interest on the full loan amount, hence the interest equals to a higher amount of money). Towards the end when you have paid off most of your loan, a larger part of your monthly payment is paying back the capital, and less interest. (Because the interest of 100k is more than it is of 5k). However, when the interest rates (typically Euribor 12) your monthly payment will change accordingly.
Tasalyhennys. You pay off an equal amount of the loan capital every month. Because of interest (same as above) your monthly payment would be higher in the beginning, and less towards the end. (Because, again, the interest of 100k amounts to more than the interest of 5k for instance). Edit: changes in interest rates will affect your monthly payment here as well.
Kiinteä tasaerä. Similar to the first one, but instead of paying more when interests go up, you will still pay the same monthly amount, but for a longer time. So if you initially had a 20 year loan, but interests go up, you end up paying your loan in 22 years, for instance.
Annuiteetti is ok if you are ok with your monthly payment going up and down along with the interest rates.
Tasalyhennys is good if you assume that you have more money now than you will have later. Let’s say that you’ve planned to have a child after 7 years, then this could be an option.
Kiinteä tasaerä if you want to have stable monthly payments, but are ok with not knowing when you are done with paying off the loan.