La Tasa Anual Equivalente TAE?

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01 Sep 2009 00:00 by hula Star rating. 26 posts Send private message

Does anybody know what is it, please?

I found it in my mortgage as beeing 4,13%

Thank you for any answers.





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01 Sep 2009 15:07 by philevans Star rating in Axminster Devon & Sa.... 187 posts Send private message

philevans´s avatar

Found this on Wikipedia

http://es.wikipedia.org/wiki/Tasa_anual_equivalente

 

unfortunately in Spanish but translates as follows

The Equivalent Annual Rate (TAE) is an orientative reference of the real cost of an investment or loan. The exact meaning is Equivalent Annual Rate or Effective Annual Rate. The TAE is an indicator that, in the form of annual percentage, reveals the cost or effective yield of a financial product, since it includes the type of nominal interest, the expenses and banking commissions and the term of the operation. That is, that the TAE difference of the type of interest in which this one picks up neither the expenses nor the commissions; only the compensation that receives the proprietor of the money to yield it temporarily. The calculation of the TAE is based on the type of compound interest and the hypothesis that the obtained interests become to invest to the same type of interest. That is the general rule. But the calculation of the TAE can slightly be different according to in question banking product. Term TAE as much appears in products saving as in the loans, as much hypothecating as consumption. Habitually, the TAE does not include the expenses that the client can avoid (for example, the expenses of transference of bottoms), those that pay to third people or companies (notarial brokerages, honoraria and taxes) or the expenses by insurances or guarantees (except for premiums destined to guarantee to the organization the reimbursement of the credit in case of death, dissability or unemployment, whenever the organization imposes its subscription for the concession of the credit). One calculates like the result of a standard mathematical formula that considers the type of interest, banking commissions, frequency of the payments (monthly, quarterly, etc.) and other expenses or income. It is very important to know if the type that is offered in an operation is the TAE (it could be a type of monthly, semester, quarterly interest). In order to calculate the TAE from the TIN this formula is used: TAE= (1+ \ frac {r} {f}) ^f-1 \ Where: * r, is the type of nominal interest (monthly, semester…) expressed in relative terms (p.ej: 7%=0,07 in as much by one). * f, frequency of payments/collections of interests: he is 12 if the type is monthly, 6 if he is bimonthly, 4 if he is quarterly, 3 if he is four-month, 2 if he is semester, and 1 if he is annual. It is important to know this data, because when P. ex. a bank promises a 7% TAE during the first month, does not mean that 7% occur to that month than is entered.

There is more

 

Well I'm confused!!



_______________________

What you see is what you get 

 




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01 Sep 2009 15:25 by hula Star rating. 26 posts Send private message

Thanks Philevans.

I am  also very confused.

I've found similar info in spanish and still don't know what it is. Is it going to effect my annual mortgage revision? Why is it slightly higher than my interest rate(euribor +0,8)?

 





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01 Sep 2009 17:12 by mariadecastro Star rating in Algeciras (Cadiz). 9294 posts Send private message

Legal Questions? Speak to Maria Direct

 

What I understand:

Nominal interest: value of the financial product without  bank commissions, and expenses

TAE: Value of the financial product ( expresed in annual percentage) adding expenses and bank commissions. ( that is why is higher than the interest rate)



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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01 Sep 2009 17:52 by hula Star rating. 26 posts Send private message

Thank you Maria.

Would the level of my TAE effect my annual mortgage revision?





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01 Sep 2009 20:29 by mariadecastro Star rating in Algeciras (Cadiz). 9294 posts Send private message

Legal Questions? Speak to Maria Direct

Dear Hula:

Rather the contrary, the interest rates will affect your  mortgage instalment and your TAE. TAE is not an index that affect youir mortgage but an annual indicator ( calculation) of cost of it ( with commissions and expenses added)

Maria



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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02 Sep 2009 06:53 by hula Star rating. 26 posts Send private message

Thanks Maria.

I think now I got it clear.





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02 Sep 2009 09:34 by mariadecastro Star rating in Algeciras (Cadiz). 9294 posts Send private message

Legal Questions? Speak to Maria Direct

That is great.

Maria



_______________________

Maria L. de Castro, JD, MA

Lawyer

Director www.costaluzlawyers.es

El blog de Maria



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08 Sep 2009 13:22 by Smiley Star rating in San Pedro de Alcanta.... 2502 posts Send private message

Smiley´s avatar

Closest thing to exemplify in the UK is APR - and if you can understand that then TAE is a walk in the park



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Smiley - patrick@marbellamortgages.com  www.marbellamortgages.com   www.comparetravelcash.co.uk




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