For many people, the purchase of a property is made by means of a mortgage. Choosing which one can be a dilemma, especially when it comes to choosing between fixed, variable or mixed.
It is often unclear what the banks offer and the different advantages of one over the other. Fixed-rate: the interest rate remains fixed for the entire term of the mortgage.
The fixed-rate mortgage is useful when:
-You want to pay equal installments and know exactly the total amount of debt
– But also when it is expected an increase in inflation and thus interest rates (which is why it is important to have a good tax advisor).
It is also advisable to choose a fixed-rate mortgage where the applicant is an employee with an average wage.
The fixed-rate mortgage offers the ability to plan and budget effectively, eliminating the risk increases in rates.
Variable-rate: the interest rate fluctuates according to one or more factors specified in the loan agreement (inflation, rising costs, etc.).
The variable rate mortgage is useful when:
– You want to take an economic risk
– There is an expected decline in inflation
– The applicant has an above-average income
– The mortgage is for a higher amount.
Finally, we come to the “mixed rate” where the rate is initially set and then can be changed depending on the deadlines and conditions set forth in the contract.
In this case, it is also important to have a good financial advisor when the mixed rate involved is expected to trend upward at an early period by a fall in subsequent years. This product is useful when the applicant does not want to immediately take a final decision on the type of rate.
Several banks, in order to attract customers, offer a very low promotional rate valid only for a limited period. After this period, it is the rate specified in the contract that becomes valid.