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?Did you know that there are three factors that help to choose the type of mortgage?
There are three factors that help to choose the type of mortgage?
To make the choice easier, we should look at three factors: ¿What profile of person are we looking at? What is the current economic situation? What is the objective of the purchase? In the following, we will help answer these questions.
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Characteristics of the applicant: conservative vs. risk-loving profile Applicant characteristics: conservative vs. risk-loving profile Firstly, there is the fixed instalment, which does not vary at any time. This is aimed at traditional people who prefer stability, or who simply do not have sufficient credit. In the opposite case, there is a variable instalment, which depends on market fluctuations, in this case, according to the Euribor. This type of variable instalments are chosen by people who have a sufficient margin of solvency, as well as flexibility in the face of changes.
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Economic environment: increase in Euribor and warning of a rate hike Applicants should always keep the long term in mind when making their decisions, and not rely solely on the near future.
Throughout the past year 2021, the Euribor has been kept under control. This year, 2022, it has been accentuated, although according to experts, this upward trend will remain moderate for at least the next two years.
Therefore, at this time, it is advantageous to choose a fixed instalment mortgage contract, since, in addition to the above, banks offer competitive conditions.
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Motivation of purchase: ?frequent use, second home or investment? When the property is going to be used frequently in the future, the amortisation period is usually longer. On the other hand, if the mortgage is for a second home, or for investment purposes, the repayment periods are usually between 10 and 20 years, as an early repayment of the mortgage is sought.
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Curiosity: ?Can I change a mortgage from fixed to variable rate? Can I change a mortgage from fixed to variable rate?
The answer is yes. Some specialists suggest the option of changing your fixed instalment to variable when it is convenient for you depending on the fluctuations of the Euribor. You should always take into account the new conditions of the change, as sometimes they may not be beneficial. This is suitable for those who are in the first tranche of their mortgage, as this is the time when the most interest is paid.