Variable rate:
The interest rate changes over time depending on the Euribor. That is why the account varies every 6 months or a year (depending on what has been agreed).
Advantage: The initial instalment is lower. Moreover, now the Euribor is negative.
Disadvantages: The instalment is variable. You cannot know what will happen in the future and how much you will pay.
Fixed rate:
The interest rate is always the same, so the loan instalment is always the same as well.
Advantage: You can have peace of mind and plan for the future.
Disadvantage: In principle, it means paying more interest and amortising capital at a slower rate.
At PSI Finques we advise you to choose a fixed rate if you do:
You prefer the peace of mind of knowing that the instalment will not change.
You think that your source of income will most likely not increase (or will increase only a little) during the period of the mortgage (for example a civil servant).
The mortgage is for more than 20 years and you do not plan to sell the property.
And also for those who do not like to gamble, bet and risk too much (in the end it all depends on how you are).
And a variable rate if:
You think that your source of income should increase in the future.
It is a mortgage for 15 years or less, or perhaps you think that it is not going to be your property for life, with the possibility of selling it in the future.
You think that the banks have learned their lesson and we have mechanisms in place that would control the indiscriminate rise in interest rates.
You like to gamble or take a gamble.
Choosing the rate is important. Talk to us anytime, so that together we can make the decision you are most comfortable with!
Direct deposit of your salary, home insurance and home life insurance are the most common types of linkages. Banks may be interested in you taking out these linked products for these reasons:
They are ensuring that you are receiving a stable source of income to pay the instalment (direct debit).
They are insuring the guarantee/property if you stop fulfilling your obligations (home insurance).
And finally, they protect the payment in case something happens to one of the holders, which although the entities prefer that nothing happens to you, it is something they prefer to have covered (life insurance).
The reductions that can be achieved are around 1%-1.2%, so the reduction is substantial, but you should be aware of the costs of the linked products and compare different APRs.
In addition, you should assess whether the interest reduction also translates when you add up all the costs of the linked products, although logically you have to take into account the value of having the property insured, and the life insurance cover for both holders (which we hope you will never need, but it is good to know that it is there).
With PSI FINQUES you can analyse if it may make more or less sense to take out the mortgage with the vinculations. The key is to analyse the costs of the associated products and understand what the difference would be if we do not contract them, in order to be able to assess whether it makes sense to pay that little extra.
The real problem is that it is not easy to know whether or not it makes sense to take out the associated products. Moreover, there is little information about the linked products themselves, their price and characteristics, which complicates the task of analysis.
As always, you can talk to us so that together we can analyse what makes sense for your particular circumstances.
The time to take out a mortgage is a very personal matter.
There are two factors that determine which is the best term for you: your income and your savings capacity. You must analyse several elements:
1. Never accept an instalment higher than 35% of our income. In this regard, you should bear in mind that the Euribor can rise and, in theory, it could reach pre-crisis levels of around 5% (although this is an unlikely prediction, the question is, could you cope if your repayments exceeded 35% of your income)?
2. Shortening the term is easier than lengthening it (as that would imply a novation of the mortgage, i.e. a change of conditions). Therefore, if you decide to adjust the terms, we recommend that you do not rush too much and that you continue to have a high capacity to pay.
3. The shorter the term, the lower the interest and the better the interest rate conditions.
In other words, in the end it is all about finding a balance between paying as little as possible for the shortest possible time so that interest rates are as low as possible, and maintaining a certain degree of ease. As a general rule, the more savings you have and the greater the source of income you have, the more sense it makes to reduce the term of the mortgage.
On the contrary, if you are a bit tight and “consume a large part of your savings with the down payment”, it makes more sense to go for long term options, because if you have to do a novation (change of conditions), nobody can assure you that the bank will accept the conditions, for example (or maybe you will have to assume a much more expensive interest rate because of your penalty, etc.).
Translated with www.DeepL.com/Translator (free version)
