20, 25 or 30 year mortgages: payments, interest and flexibility
Understand duration while holding principal and rate constant, then connect payments with your budget.
Read guide →Simuily / Learn and calculate
Inflation and purchasing power
Your scenario, explained
Change the inputs and explore the result over time. Figures are estimates under the assumptions you enter.
How it changes over time
Every year, in view
Year-by-year evolution
What the result can tell you
Understand before deciding
Inflation: how the purchasing power of savings changes
Inflation describes an increase in a measured price level over a period. For savings, the practical question is how much a balance will be able to buy in the future. Money can remain untouched yet lose purchasing power when prices rise. A balance can also grow in currency terms while buying less than before. Distinguishing nominal money from purchasing power prevents every increase in an account balance being interpreted as an equivalent improvement in living standards. This guide uses constant rates to explain the relationship. It does not forecast inflation over the coming years or reproduce every household's spending pattern.
An annual percentage is not the cumulative change
If a basket of purchases costs 100 and prices rise by 3% in one year, it then costs 103. If prices rise by another 3% the next year, it costs 106.09 because the second increase applies to 103. The cumulative increase is 6.09%, not exactly 6%. Over longer periods, compounding matters more. Multiplying an annual rate by the number of years is only a limited approximation and does not reproduce the compound calculation. The formula raises one plus the rate to the number of periods, with the period definition kept consistent throughout.
Future prices and present values answer different questions
To estimate the future cost of a purchase priced today, multiply its price by the inflation factor. To express a future balance in current buying power, divide by that factor. Reversing the operation reverses its meaning. If something costing 1,000 rises to 1,100, retaining 1,000 is no longer enough to purchase it. But the purchasing power loss does not mean that the retained money is simply worth 900. Divide 1,000 by 1.10 instead, giving approximately 909.09 in starting date money. Percentage price increases and percentage losses of purchasing power are related but not identical.
Your own spending basket may move differently
A general index summarises a particular combination of goods and services. Your household may spend different proportions on housing, food, energy, transport or care. Your experience can therefore differ from the index without either being inherently wrong. For a specific goal, update the actual purchase budget as well. Check course fees when saving for education and comparable quotations when planning a renovation. A general inflation assumption helps explore sensitivity, but does not replace information about the particular good or service you intend to buy. Nor does it establish how your wages or other income will change.
One example, three possibilities
This is a hypothetical case. Compare effort, outcomes and timing without treating rates as forecasts. The figures use the same engine as the interactive calculator.
Scenario A
Starting or outstanding principal: 8,000 · Assumed annual inflation (%): 2 · Term in years: 10
- Future purchasing power: 6,562.79 EUR
- Purchasing power lost: 1,437.21 EUR
- Equivalent future price: 9,751.96 EUR
Scenario B
Starting or outstanding principal: 8,000 · Assumed annual inflation (%): 3 · Term in years: 10
- Future purchasing power: 5,952.75 EUR
- Purchasing power lost: 2,047.25 EUR
- Equivalent future price: 10,751.33 EUR
Scenario C
Starting or outstanding principal: 8,000 · Assumed annual inflation (%): 4 · Term in years: 10
- Future purchasing power: 5,404.51 EUR
- Purchasing power lost: 2,595.49 EUR
- Equivalent future price: 11,841.95 EUR
Questions that help explain your figures
What is starting capital?
It is the amount at the start of the calculation: an assigned savings balance or the stated loan principal, depending on the tool.
What is a recurring contribution?
It is new money added each period, separate from any growth generated by the balance.
How do simple and compound interest differ?
Simple interest does not include past interest in its calculation base. Compound interest allows previous interest to participate in later periods.
What is an effective annual rate?
It represents an equivalent one-year change under the stated convention. Its monthly equivalent is (1 + annual rate) raised to 1/12, minus 1.
Is the entered return guaranteed?
No. It is a model assumption, not a determination that a real product will provide that result.
Can I calculate at zero interest?
Yes. Savings become starting capital plus contributions, while a repayment loan divides principal by the number of payments.
Are contributions made at the beginning or end of the month?
These tools use contributions at the end of each month. A different timing convention can produce a different result from the same amounts.
What is a value in today’s money?
It adjusts a future balance using assumed inflation. It helps interpret purchasing power and does not automatically deduct taxes or fees.
Does switching currency convert my money?
No. It changes the displayed unit here. Actual conversion needs an exchange rate and its date.
Must language and country match?
No. You can read in English about a Spanish transaction or use Spanish for another market. Location determines local context.
Does the mortgage payment include all housing costs?
No. Principal and interest are separate from recurring costs you enter. Initial purchase expenses form another cost group.
What does repaying principal mean?
It means returning some of the borrowed money. Interest is a separate cost and does not itself reduce principal.
What is an amortisation schedule?
It breaks down payments, interest, principal repaid and remaining balance, under stated rate and timing assumptions.
What is LTV?
It is the loan divided by a reference property value. Simuily’s purchase model uses the price you enter, not a lender’s appraisal.
Can I use APR or TAE as the payment interest rate?
Do not automatically substitute them for the contractual rate. They are locally defined cost measures that can include more than periodic interest.
Is a longer term always better?
With principal and rate held constant, it usually lowers payments and raises total interest. Both effects should be shown.
What happens if the interest rate changes?
A constant-rate schedule no longer describes the whole contract. Model the reset and recalculate from the balance at that date.
Do lower payments and a shorter term save the same interest?
Not necessarily. In a comparable fixed-rate model, keeping payments and shortening the term normally saves more interest; lower payments release monthly cash.
What are closing or purchase costs?
They are expenses associated with completing a purchase or financing in a market. Separate them and check the country, region and transaction.
Are taxes calculated automatically when I select a country?
Not in these tools. Costs are manual. Entered costs should correspond to your local transaction.
Why can two calculators disagree?
Check nominal versus effective rates, contribution timing, payment frequency, rounding and included costs. Match conventions before comparing.
What is a scenario?
It is a set of assumptions. Comparing scenarios shows how results change, not the probability of each outcome.
What does the CSV download contain?
It includes the yearly table, entered values, currency, country context and calculation assumptions. Amounts are exported to two decimal places for review.
Do I need an account?
No. The tools, guides and CSV downloads are public and do not require an account.
Guides to understand each decision
A savings budget: turning income into sustainable contributions
Organise spending, annual bills and monthly headroom to find a contribution you can sustain.
Read guide →Amortization schedules: reading principal, interest and outstanding debt
Check each column and understand why a payment’s principal and interest components change over time.
Read guide →Compound interest with monthly contributions: how to read your results
Understand contributions, compounding conventions, inflation and scenario comparisons before relying on a projected balance.
Read guide →Useful terms on this page
Principal
The starting savings balance or loan amount used by the model.
Contribution
New money added to a balance.
Inflation
A change in the price level; its future value in a model is an assumption.
Payment
A recurring payment whose included components must be stated.
Amortisation
Repayment of loan principal.
Liquidity
The availability of money for use.
Term
The duration of a plan or loan.
Nominal interest
A rate quoted under a frequency and convention that must be stated.
Effective rate
An equivalent rate reflecting compounding over the stated period.
LTV
Loan divided by the specified reference property value.
Down payment
Money paid towards the purchase price, separate from other expenses.
Scenario
A set of assumptions used to compare outcomes.
Emergency fund
Money reserved for unexpected needs or an income interruption. Its size and access should reflect your expenses and circumstances.
Sinking fund
Money allocated to an expected expense with an approximate date, separate from an emergency reserve.
Nominal balance
An amount expressed in the currency and date of the calculation, without adjusting purchasing power for inflation.
Real balance
A balance adjusted by a price factor to express purchasing power at a reference date, not a separate bank account.
Percentage point
The difference between percentages: moving from a 3% rate to 4% is a one percentage point increase.
Fixed charge
A cost expressed as a money amount, distinct from a percentage of assets or a contribution.
Semiannual compounding
A nominal rate convention with compounding twice a year. Its monthly equivalent is (1 + annual rate/2) raised to 1/6, minus 1.
Outstanding balance
Principal still owed on a particular date. It differs from the sum of future payments, which may also contain interest.