Serial loans can save borrowers huge sums, but still most Norwegians choose annuity loan, writes the Finance newspaper.
– This has probably some background from Norwegian traditions, where annuity loan has a very strong position. We also see that many customers want fixed and predictable monthly payments, says consumer economist Nigel Sandmæl DNB.
The newspaper’s calculations show that the difference between a loan of around 3 million with nominal interest rate of 2.5 percent with a 25 year repayment period and monthly payments, are almost 100,000 kroner. If the loan of 5 million, increasing the difference to 160,000 kroner.
Annuity loan is re-paid in fixed installment with both interest and repayments. With serial loans the principal repayment element is fixed, whilst the interest payments vary with the size of the remaining debt. That makes the first installment amounts the greatest.
Source: NTB scanpix / Norway Today