NIR, APR, and Total Amount Payable are outlined in part A of the FINE (European Standardized Information Sheet) provided by the financial institution when you request a mortgage proposal to buy your house.
In reality, these acronyms stand for Nominal Interest Rate (NIR), Annual Percentage Rate (APR), and Total Amount Payable, respectively. They each represent different values, and understanding their meanings could save you hundreds (or even thousands) of euros over the life of your mortgage — or, conversely, lead you to overpay.
So, what are NIR, APR, and Total Amount Payable, and why are they important for your mortgage?
NIR: It Only Reflects the Interest on Your Mortgage
The NIR represents the interest rate you’ll pay on the amount borrowed. In other words, it helps you calculate how much you’ll pay annually in interest for your mortgage. If you want to know the total amount of interest you’ll pay over the life of your loan, you can simply multiply the annual interest by the number of years in your mortgage term.
However, the NIR listed in the FINE applies only at the time you take out the mortgage. This calculation is accurate only for fixed-rate loans. For variable-rate loans, where the NIR changes during index rate reviews, the total amount of interest you’ll pay may vary significantly, especially if the Euribor increases.
To Understand the Total Cost of Your Loan, Look at the APR and Total Amount Payable
When repaying your mortgage, you’re not just paying interest. You’ll also pay fees, taxes, mandatory insurance premiums, and costs associated with other financial products required to reduce your loan’s spread.
So, if you only consider the NIR, you’ll miss an essential part of the costs associated with your loan. Put differently, a lower NIR doesn’t necessarily mean a cheaper mortgage.
To understand the true cost of borrowing, focus on the APR and the Total Amount Payable. Both reflect the total cost of the loan but in different ways.
APR and Total Amount Payable Include All Loan Costs
Both metrics account for:
- Interest on the borrowed amount;
- Loan-related fees (e.g., loan origination fees);
- Fees for additional products needed to secure a lower spread (e.g., credit card annual fees);
- Stamp tax on mortgage origination and interest;
- Premiums for mandatory insurance policies (e.g., life insurance and property insurance) if purchased from the lending institution.
However, they present the total cost of the loan differently.
APR: This is a rate expressed as an annual percentage. Since it includes all mandatory costs (which must be disclosed in the FINE), it’s always higher than the NIR. However, it doesn’t account for costs related to early repayment or penalties for missed payments, for example.
Total Amount Payable (MTIC): This is the sum of the loan principal, interest, fees, taxes, and insurance premiums. It reflects the actual total cost of the loan in euros. Unlike the APR, it gives you a clear idea of how much you’ll pay in total for borrowing the money.
Get in touch with Lead Kash
Want to save money on your mortgage? At the end of the day, we’ll present the ideal solution to help you achieve that goal. Lead Kash handles the entire process for you—from interpreting the NIR, APR, and Total Amount Payable to comparing proposals from various institutions. And the best part? This service is completely free for you. Request a simulation, get in touch with us, and let us simplify your life.
