The amortisation schedule is the project of mortgage repayment: it is important to examine it carefully. The schedule establishes the provided sum, the instalment amount, the date by which the debt must be reimbursed, the instalment periodicity (month, trimester, semester), the parameters determining the amount of every single instalment and the remaining debt. The mortgage instalment is composed of:
Principal Payment: the amount of the returned financing
Interest Payment: the accrued interests
There are many ways to repay the loan.
The most common amortisation schedule in Italy is the so called “French” method: the fixed rate instalment is composed of an increasing principal payment and a decreasing interest payment. At first, you will especially pay interest. Considering the interest applied on the residual capital, the amount of interest gradually decreases and the principal payment increases as the capital returns. The variation of the instalment composition in principal payment and interest payment can influence the fiscal deduction, which amount can change year by year. The interest sum is deductible and decreases along the time. An example of amortisation schedule is included in the ”Prospetto informativo Europeo Standardizzato PIES”. It is about the fixed rate mortgages for the duration of the contract and about deferred interest reimbursements. In these cases, once the contract is signed, it is possible to obtain from the lender, in every moment of the working relationship, a free updated version of the amortisation schedule, which is provided al least once a year anyway.