At present, those interested in installment stability may only be interested in three offers. Importantly, a mortgage with a fixed installment cannot be taken out for the entire loan period. The maximum installment blocking period is only 5 years. It seems to me that this will change in the future. Borrowers are becoming more aware and will push for banks. These, in turn, will look for new opportunities to compete with each other.
Fixed rate mortgage. How’s it working?
A fixed-rate loan gives customers security in the form of a fixed and reliable installment over a longer period. At the moment, unfortunately, this time is limited only to the first 5 years. Any increase in the installment and the total cost of credit during this time are blocked. This is a kind of insurance for your finances and it is worth considering such a solution.
Fixed interest only for 5 years. Does that make sense?
Every financial decision is an alternative choice. By choosing one option, you bet with the future whether you were right. I believe that a mortgage with a fixed interest rate for the first 5 years makes perfect sense. About 80% of my clients are mostly young people in the so-called achievements.
The most frequently served clients are 35-35 years old. Personally, I think that for these people the first 5 years of credit is the most important. Young people, in most cases, will climb the career ladder if they want and have ambitions. Of course, income growth is also associated with development. Any increase in the loan installment for a year or 2 will be much more noticeable than in 5 years. Several hundred dollars more on installment will hurt much more than in five years.
What will it be like in the future?
In my opinion, banks will slowly introduce a fixed rate loan to their offer. Sparrows chirp that the Financial Supervision Authority is conducting advanced works on the appropriate recommendation. Through it, he wants to force all mortgage banks to offer fixed rate mortgages. If this happens, this option will probably be a little more expensive than for loans based on 3M / 6M interest . Interesting solutions can also be observed in other countries. There you can take a loan with a fixed installment of up to 30 years. It is important to emphasize that the longer the loan period with a fixed interest rate, the higher the rate.
Advantages of a loan with a fixed interest rate
As the advantages of a fixed interest rate, I would mention:
1. installment stability, interest and all costs,
2. the security of the banking system, which is much more predictable when both parties know the amount of liabilities,
3. reducing the risk of falling real estate prices.
Disadvantages of a loan with a fixed interest rate
At first glance, a great solution, but unfortunately it also has disadvantages. Among the main ones I would mention:
1. the usual higher interest rate than in the case of variable installments,
2. possibility of applying a commission for early repayment,
3. low availability of offers on the market.