Instead of taking a single loan of 200 000 at 1.7% over 25 years, I've been proposed to take out two loans:
- 100 000 at 1.2% over 15 years (loan A),
- 100 000 at 1.7% over 25 years (loan B)
With the duo loan I would pay back 804.20 monthly over 25 years. For the first 15 years: 607.33 goes towards A, and 196.87 goes toward B. For the last 10 years the 804.20 is paying back principal and interest of loan B.
How did the bank calculate that I should pay 804.20 monthly? Do they have a formula for this? I only figured out it was A's monthly (607.33) + 196.87. The latter is slightly more than the annual interest of loan B. I could not find any correlation between 804 and my monthly salary. It seems quite arbitrary.