when you decide to comprar a house, the normal thing is to contract a mortgage loan. Now, at this point a long-distance race begins, where to find the best mortgage conditions is your biggest goal.
Paying the minimum or, at least, not paying more for your new property is essential, therefore, when calculating your mortgage payment it is necessary to know the interest rates of mortgages.
At Avanza Homes we want to explain the interest rates you must pay on your mortgage, how it can impact your monthly payment and what you should pay attention to in order to choose the best option for you.
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What are mortgage interest rates?
Before going on to explain the different types that you can contract, it is necessary to know what you are paying when we talk about mortgage interest rates.
The interest rate is the extra we pay In return to receive a amount from money, in this case from a bank. On the borrowed amount is applied a percentagewhich you must pay at the same time you pay the bank fees.
But to understand it better, it is necessary to know that in order to have solvency, banks receive money from the European Central Bank and, this in turn, is responsible for estimating the percentage of official interest rate.
Therefore, we can say that the interest rate is the price of money. The value for which the ECB provides money to the different banking entities.
For all this, when we talk about mortgages it is important that you familiarize yourself with the term euribor and its possible fluctuations.
The Euribor is the reference percentage of the euro interbank market interest rate. East index is a factor clave when contracting your mortgage, since it can directly affect your monthly payment. In most cases, you have the possibility to choose between fixed, variable or even mixed interest.
How do they influence your mortgage payment?
When you ask for a mortgage loan, you must be clear that interest rates can have a significant impact on your mortgage payment. Until now we have seen who is in charge of marking the value of money, but now it is time to talk about the reason and how can you to affect.
Interest rates fluctuate depending on the economic situation. The ECB is in charge, as we have seen before, of raising or lowering this value in order to revive consumption or check so the economy.
To calculate your mortgage payment correctly, you need to take into account the final value of the property and the type of interest. To do this, consider the economic situation of the moment is essential, since when you sign a mortgage loan, it is normal to do it for a period largo of time (for example, 30 years).
So how do you choose the best interest rate for your mortgage?
Although there is always a riskreceive advice of experts who help you understand the economic situation and how it can affect your mortgage payments can be the difference.
In Avanza Homesthanks to our continuous studies and years of experience in the sector, we know perfectly the evolution from euribor and we are able to make a good forecast of its possible fluctuation.
Therefore, it is not only about being more or less conservative when making economic decisions, but this type of decision must always be linked to a complete study. Once all the information is gathered, you will be at a good point to choose appropriately.
interest rates
As we have already mentioned before, there are different interest rates that you can choose when hiring your mortgage.
Fixed interest
You will see that many banks sell you this type of interest as: “the mortgage no surprises”.
This is due to the fact that in this mortgage the same interest rate during the years of the loan. In other words, even if there are fluctuations, your mortgage payment will not be affected by variations in the financial market.
exist cases where it can be very beneficial this interest rate, such as when numerous economic changes occur or the Euribor suffers a significant rise.
But you must also understand that banking entities cannot face an excessive rise in the Euribor and lose money, for that reason, you must know that the fixed interest rate for mortgages is usually higher than for a variable rate mortgage.
It is a complex decision where you must meditate all your possibilities. If the financial situation were very unstable and interest rates rose a lot, this typology would be really beneficial, but what if it is not and you are paying more?
Here comes the time to consider if you compensates the possibility of pay morebut instead, have the tranquillity that your mortgage payment will not fluctuate.
Variable interest
It is true that the only way to prevent interest rates from impacting your mortgage payment is to choose a fixed-rate mortgage, but it is not your only alternative. Variable interest rates also have numerous Benefitsyou just have to consider if it is for you.
The variable interest for a mortgage is one where the amount of the dues mortgages is linked to euribor. In other words, it can go up or down depending on the fluctuations that the percentage of the official interest rate may suffer, this normally usually update every 6 months.
It can be very beneficial at times when the market shows a certain stabilitythe euribor it is under or for people with certain economic solvency that can cope with a sudden change in the financial market. perform a exhaustive study of the market and, above all, to be very attentive to possible changes in the economy is very necessary.
mixed interest
But if you do not decide on any, you also have the possibility of hiring a combination between the two, that is, a mixed interest rate.
With this type of interest you can join and benefit you of the advantages of both. Depending on the agreed, for a time you can have the guarantee of paying a fixed interest and another of variable interest.
You may think that it is the best option, but to choose this type of interest it is essential to make a good forecastmake a reading of possible changes in the economy and know where it would be more beneficial for you to apply one interest rate or another.
To tell the truth, no one can know security until the years of the mortgage loan elapse, if it is totally beneficial to choose one interest rate and another, but the only thing we can assure you is that buying a flat with Avanza Homes is a success, union of transparency y professionalism.
We will answer all your questions and we will guide you with total sincerity to obtain the best mortgage conditions, because looking out for your interests is to look for our own.
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