Fixed rate mortgages at the beginning
If we do not want to link in this way, the fixed rate would remain at 5.24% TIN, which we would have to see how it looks when calculating APR, with the cost of insurance, plans, the opening commission of 0.25%, etc. .
This loan also offers the possibility of a blank year, an initial period that no fee would be paid, so that the family can make other initial payments that the purchase of a home entails. It is not a recommended option in most cases. In addition, it should be borne in mind that if we do not pay anything, at the end of the year the outstanding debt is greater than at the beginning, since unpaid interest increases the outstanding debt.
More interesting is the following option:
The rental option with purchase option should be a generalized formula for access to housing, with the help of financial institutions. When I worked at Bankimia, with a great team and an address whose policy I did not share, I wrote several contents about the rent with option to purchase that may be of your interest:
Articles on the lease with purchase option: Introduction, modalities, risks, legal and economic problems and taxation.
Advantages of fixed mortgages
In the following article of El Confidencial I have commented on the aforementioned fixed-rate mortgage and the virtues of this type of indebtedness, so little offered by the banks. For example, I comment:
“a competitive fixed-rate loan that can be interesting for a family that does not want to risk future increases in Euribor.” However, he warns that “the biggest drawback is that family income must be high enough to be able to comfortably pay a fee calculated to a maximum of 20 years. A debt ratio of 30% -35% would be ideal. In any case, an initiative in the right direction, encourage indebtedness at fixed rates, ”he concludes .
The previous statements summarize my opinion of the fixed rate
- It allows the family to know at all times the fee they are going to pay which, in addition, is supposed to be a smaller burden over the years, due to the mere passage of time and inflation.
- When granted for shorter terms than their variable equivalents, the quota is greater, but it forces us to be more cautious when choosing housing, a very healthy side effect.
- Banks usually offer too high rates. An offer less than 5% does start to be interesting. On the other hand, they have a great drawback, the cost of changing banks, since they have compensation for interest rate risk that are often 4% of the total we subrogate.
From my point of view, it should be legislated to promote fixed loans, above the variables. But as financial institutions are not interested, our legislator and supervisors do not.
If you are looking for a fixed-rate, variable-rate mortgage, a reunification of mortgage-based debts or, simply, more information about the mortgage sector, we invite you to request information from Good Finance mortgage experts by clicking on the following button: