Uncertainty is the main difference between these two financial products that must be chosen when buying a home.
Buying a home is a management that entails the choice of a mortgage to finance the sale. Choosing between a fixed rate or a variable rate will condition when planning family expenses, but do you know which is better according to your situation?
Reflecting on the subject can help clarify your ideas and so that you can make the decision with your head, we leave you with some questions that will help you lay the foundations on which to meditate on your decision.
What type of mortgage should I choose when buying a house?
Choosing a mortgage is a difficult decision that requires meditation and knowledge about the options that are offered, since the selected option will mark the following years of our economic situation.
Depending on the situation and the objectives of each person, the fixed option, the variable or even a combination of the two may be better. Fixed-interest loans ensure a stable installment, which helps in planning expenses. However, the fees, especially at the beginning, are usually higher than in the variable rate. The variable rate ones usually have a lower installment the first years. This financial product may be convenient taking into account the expectation of a salary increase throughout the improvement in the professional career, but there is uncertainty about the evolution of the fee, so it must be a considered situation. the decision must be made individually and with a head. “It depends on the personal and economic situation. To choose one, you have to study the characteristics of each person and the mortgages”, he comments.
Mixed mortgages are a financial product that combine aspects of fixed-rate and variable-rate mortgages. During the first years, you will have to pay a fixed fee. During this period, greater planning of family expenses will be necessary. The economic stability that has been achieved will make it possible to face a variable installment period in the next tranche of the loan. Regarding whether mixed mortgages are the solution, Sánchez insists that the characteristics of each financial product should be looked at and whether the present and future financial situation of each family unit will make it possible to face it. He explains that “mixed mortgages are a mixture and this allows you, for 5 or 10 years, which are the ones that the fixed rate usually lasts depending on the total repayment period, greater planning.”
What aspects should I take into account when choosing one or the other?
Having the right information, including the possibility of consulting an expert, is decisive when choosing a mortgage correctly due to the aspects that must be assessed in this situation.
Choosing a mortgage is one of the most important decisions in anyone’s life. It must be meditated to know the one that best suits your interests and your economic situation. After taking into consideration that there are fixed-rate mortgages and others with a variable rate, the important aspects that can condition the decision to choose between one and the other must be addressed. For this, it is important to know the fundamental elements that must be taken into account when studying a mortgage.
First, there is the capital requested from the bank. On the other hand, there is the repayment term of the loan, which is the number of years in which the borrowed money will have to be repaid. Finally, you have to pay attention to the applicable interest rate, which can be fixed or variable. Carlos Sánchez Burriel explains that in variable interest mortgages you have to look at the differential that is applicable to verify that in all the mortgages that are looked at it is the same. “In all of them it is usually the Euribor, to which is added a differential, which can have bonuses”, he comments.
Risk is inherent in variable rate mortgages. The Euribor is an index that usually varies and this will cause the mortgage payments to be modified. “In the event that the Euribor decreases, this fee will be reduced, while if it goes up, it will increase,” says expert, who points out that people who opt for a variable-rate mortgage should know that their fee will not vary every year. months, since the Euribor is revised once or twice a year and that is when the fee to be paid will be modified, either upwards or downwards.
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