The payments are calculated using the French repayment system. With this system, the payment is calculated at the beginning of each interest period and does not vary throughout this period. It could vary from period to period or during a same period if making a partial repayment.
We use the following formula in the French repayment system:
Payment = (C * i / m) / (1 - (1 + 1 / m) EXP(-m * n))
Where:
C: outstanding principal on the loan i: nominal annual interest rate m: number of annual payments n: number of years in the repayment period
Let's look at an example using the formula. If you have a loan of €150,000 at an annual interest rate of 2.50% and you repay it on a monthly basis (12 payments per year) over 25 years, your monthly payment will be €672.93.
Here is the formula, with the sample figures:
(150,000 * 0.025 / 12) / (1 - (1 + 0.025 / 12) EXP(-12 * 25)) = €672.93