After five years trading in negative, the Euribor has returned to positive ground and this directly affects the pockets of all people who have variable-rate mortgages. In fact, this Wednesday it has exceeded the 1% level in its daily rate for the first time in almost a decade.
Therefore, there are those who wonder if switch to a fixed rate mortgage is an interesting option at the moment. And there is always the question of whether Is a fixed or variable mortgage better?. But let’s go by parts.
Choosing a mortgage is a complicated task because it is usually a very long-term debt. The objective is always to pay less for the money they lend us, but all the circumstances must be studied.
Difference between fixed and variable interest in a mortgage
1. Fixed interest: it remains constant throughout the term and does not depend on external indices. It is suitable, therefore, for customers who want stability.
2. Variable interest: it is linked to a reference index (normally the Euribor). Therefore, if that index rises, the rate increases and more is paid in the mortgage payment, while, if it falls, the interest is reduced and less is paid.
Is a fixed or variable mortgage better?
To choose between a fixed or a variable mortgage, you must take into account the profile of the person requesting the loan and their level of tolerance for riskas well as the situation of the present and future rates.
1. In the fixed rate mortgagethe client assumes to pay a little more because the interest is higher than in the variable, but in exchange he earns the tranquility to know that you will always pay the same installment.
2. one adjustable mortgage It is a good option for those people with enough purchasing power to assume high fees that allow them to pay off their loan soon. Especially, in a scenario of rises in the Euribor. In this way you can reduce the effect of future increases in your monthly payments because you will have already paid a good part of the money you owe with early repayments. In addition, these types of mortgages usually have fewer and lower commissions.
The truth is that it is not easy to choose and there is no perfect mortgage. Remember that you can negotiate with the bank and that once you have your mortgage there is the possibility of change from one mode to another.
Source: Lasexta
Paul is a talented author and journalist with a passion for entertainment and general news. He currently works as a writer at the 247 News Agency, where he has established herself as a respected voice in the industry.
