2023-12-27 11:50:38
If you are in the process of purchasing a home, you will have to check that choose between a fixed mortgage, mixed mortgage or variable is not exactly a simple taskespecially in a time of economic uncertainty like the one we find ourselves in today, given the existing war conflicts in Ukraine and the Middle East, one of the moments of highest inflation in history and a Euribor at more than 4%.
This causes there to be many doubts when choosing one type of mortgage or anotherespecially by those people who are not aware and do not know the characteristics of each mortgage model.
And, when choosing between one modality and another, the truth is that The best mortgage will vary depending on each casehaving to assess aspects such as the personal situation of each person, their financial health, as well as the conditions of the loan and the macroeconomic context in which we find ourselves.
In fact, we can say that the client will not know if he has chosen the right mortgage until he finishes paying the mortgage loanhence an answer cannot be given.
Aware of the many doubts that exist, below, We are going to explain the different types of mortgage and which is the most convenient depending on the applicant’s profile.with the aim of helping you make a decision and, above all, get it right.
Fixed mortgage: what is it and who is it suitable for?
For its characteristics, Fixed mortgages are the most recommended for clients who have a more prudent profileand they want to be clear about how much they are going to pay for their loan at all times, minimizing any risk.
As its name indicates, this type of mortgage is characterized by being a mortgage loan with a fixed interest ratewhich means you will always pay the same throughout the entire loan repayment term, regardless of what the Euribor or any other benchmark does.
The main drawback is that, in general, Fixed mortgages usually have higher payments at the initial time, although, on the other hand, you ensure that they will not increase. Likewise, if the Euribor fell compared to the time you took out the mortgage, you would continue paying the same.
On the other hand, A fixed mortgage usually has a shorter amortization period., which makes it the best option for those of advanced age, rather than for young people. Although, as we have mentioned previously, everything will depend on each person’s personal circumstances.
Variable mortgage: what is it and who is it suitable for?
Unlike the fixed ones, In variable mortgages the interest can change over time, depending on how the Euribor fluctuates. If the price is rising, the interest will increase and, if the price is falling, the installments will be more affordable. This makes them the best option at times when the Euribor is low.
Generally, they are the mortgage loans most in demand by those profiles who are not afraid of riskand that they are aware that changes in indices and interest rates will be more than certain in a period of between 20 and 30 years, which is the most common repayment period for this type of mortgage.
And A very important aspect to take into account is the applicant’s long-term income expectation.. If it is expected that they will increase, a variable mortgage could be a good option, but, if it is clear that they are not going to grow, it would be better to opt for a fixed rate mortgage.
Mixed mortgage: what is it and who is it suitable for?
Lastly, there is the mixed mortgage, which is the best option for most profilesespecially for those who have good financial solvency and have job security at the time they are going to take out the mortgage loan.
These mortgages are characterized by having a fixed interest for the first 5 – 10 yearsthis being the most common term.
In general, In these first years, the payments will be higher than in variable mortgagesand similar to those of a fixed mortgage, but on the other hand, by abandoning the fixed rate, the cost will be significantly reduced.
According to experts, The mixed mortgage is the most suitable for people who want to pay a fixed and stable payment during the first yearsand they are not afraid that the Euribor could rise later, mainly because they trust that they have a good economic situation.
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