You will have to make a very important decision if you are thinking of buying a house or apartment: choose between a fixed or variable mortgage. Here at Trion Finance & Consulting we want to advise you as best as possible so that you can make the right decision in this area, especially considering that the Euribor is again at a minimum.
Fixed or Variable Mortgage
Advantages and disadvantages of the fixed mortgage
The main advantage of fixed mortgages is precisely their guarantee of stable interest payments for as long as it takes to pay off the mortgage.
If you know specifically how much you will pay in mortgage, you will be able to organize your personal finances quickly and effectively.
Another advantage of this type of mortgage is that they are now becoming more accessible to everyone, and fixed mortgages with payments below 2% can easily be found.
If not, the disadvantage of the fixed mortgage is none other than its high cost in installments when starting the loan payment, and you may also find that in some cases there may be an advance charge that can be as much as 2% of the amount to be repaid. In some cases there is also a higher origination fee.
Because the Euribor is suffering a surprising drop in recent months, it is convenient to take out an adjustable mortgage, thus paying much less money on your mortgage debt than if you would take out a fixed mortgage. They are the right choice if you plan to take out a mortgage to pay it off in the short term!
Another advantage of variable mortgages is that they tend to have longer repayment terms, generally having much lower fees than they should.
The main disadvantage of variable mortgages is precisely their instability in the payments to be made, which can become much more expensive than a fixed mortgage payment in a matter of days only, besides the fact that you run the risk of them becoming more expensive to pay in the long term if the price does not go down again.
What is a fixed mortgage and an adjustable mortgage
When reference is made to variable or fixed mortgages, it is really referring to the interest rate of a mortgage loan. Remember that mortgages are usually obtained in order to ensure the fulfillment of an obligation, being paid periodically with a certain interest rate.
In this case, fixed mortgages consist of obtaining a type of mortgage contract that guarantees you a fixed and unchangeable payment of a sum of money (including interest on it) that does not change over time.
On the other hand, variable mortgages guarantee an interest payment that will change according to time and market conditions, being subject mainly to the variable interest rate you have accepted and the estimated index of the bank with which you work.
The biggest advantage of the variable mortgage is linked to the Euribor, which is the reference index that is published daily and which indicates the average interest rate to which a large number of European banks are subject for short term loans, being in simple words an interbank market interest rate of the euro.
Make the best decision accompanied by professionals
At the end of the day, it is you who will have to make the decision of which mortgage to choose and decide which type of mortgage is best, counting on our specialized advice to guarantee the best decision making as far as your money is concerned. Hire our consultancy services and make sure you have the ideal mortgage. Ask for advice