| Rent | Mortgage |
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2. Profitability of mortgage credits depending upon period.
As mortgage credit is long-term credit, it allows mortgagor to receive high amount. Mortgagor gets living space and monthly pays amount, not more than 50 % of his monthly income to bank. Long-term credit enables mortgagor to pay credit liability and meet own demands without difficulty. At the same time, an increase in payment period raises amount paid on interests during the period. Impact of credit period on amount is shown in chart below. Here, credited amount is 30000 AZN, and annual interest is 12%.
As mortgage credit is long-term credit, it allows mortgagor to receive high amount. Mortgagor gets living space and monthly pays amount, not more than 50 % of his monthly income to bank. Long-term credit enables mortgagor to pay credit liability and meet own demands without difficulty. At the same time, an increase in payment period raises amount paid on interests during the period. Impact of credit period on amount is shown in chart below. Here, credited amount is 30000 AZN, and annual interest is 12%.
| Credit period | Annuity payment | Amount will be paid on interests during the period |
| 3 year | 996 | 5 856 |
| 5 year | 667 | 10 020 |
| 10 year | 430 | 21 600 |
| 15 year | 360 | 34 800 |
| 20 year | 330 | 49 200 |
| 25 year | 316 | 64 800 |
| 30 year | 309 | 81 240 |
Impact of interest rate on paid amount is shown in chart below. Here, credited amount is 30000 AZN, and annual interest is 12%.
| Credit rate % | Annuity payment |
| 12 | 360 |
| 11 | 340 |
| 10 | 322 |
| 9 | 304 |
| 8 | 286 |
As shown decrease in interest rate relatively affects the decrease in monthly annuity payment and decreases general payment charge not so as you’d notice. At the same time, from the economics and international practice view, there are fundamental financial factors affecting interest rates determined under mortgage credits. The diagram below shows the financial factors affecting mortgage credits in Azerbaijan.
Annuity payments are regular, equal, monthly payments made to pay off the debt. These payments are calculated so, that at the end of payment period debt is completely repaid. Annuity payment is calculated by the following formula:
Here,
Pm – is amount of monthly payment;
D – is unpaid part of credit;
r – is annual interest rate (%) determined in credit contract;
n – is months to the repayment of credit.
Translations are not official and not notarially approved.