ADVANTAGES AND DISADVANTAGES OF FIXED AND VARIABLE MORTGAGES

Rising interest rates may affect those with variable rate mortgages.

However, it is important to assess the advantages and disadvantages that can be found when considering choosing between variable and fixed rate mortgages.

FIXED RATE MORTGAGE

When you sign a fixed-rate mortgage, this means that the interest rate will be the same throughout the life of the loan and that you will pay the same instalment throughout that time, regardless of the amount corresponding to amortization or interest.

VARIABLE RATE MORTGAGE

The variable mortgage is the most common because the interest rate changes over time, coinciding with the periodic reviews that each user has agreed with their bank on their loan.

Interest rates have been falling in recent years, making this type of mortgage more attractive.

However, in the last period, interest rates have begun to rise at an alarming rate, which means that this type of mortgage is no longer attractive and fixed-rate mortgages are safer.

ADVANTAGES OF CHANGING FROM VARIABLE TO FIXED

This is the situation when the question arises as to whether it is worth moving from mortgage variable to fixed.

An important point is that a more stable situation will be achieved knowing that the rise in interest rates will not affect our mortgage.

This will have a positive impact on the family economy since the installment will remain the same until the end.

DISADVANTAGES OF CHANGING FROM VARIABLE TO FIXED

Depending on the entity where the loan is held, it will entail some modifications that may involve subrogating to a new mortgage or cancelling the existing one and taking out a new one.

Either option means paying expenses derived from these changes.

It may also be the case that a higher instalment is paid initially, since the instalment is calculated over the entire life of the loan using average values calculated by the bank.

Another drawback is that there is no possibility of profiting if interest rates fall again.

NEGOTIATE

At the point where one considers the possibility of changing the mortgage from variable to fixed, it is a good time to, before deciding, negotiate with different banking entities.

First, talk to the bank with which you have the mortgage to see what options they can offer in this regard and then with other ones. entities, and depending on what is most advantageous, finally decide.