Do you want to get involved in a mortgage repurchase procedure? Find out which mortgage buyout rate is profitable for you.
Variable or fixed rate: which of these mortgage loan redemption rates?
As with any loan application, you can choose between a fixed or variable rate when you buy a mortgage. To optimize your choice during this operation, the aim of which is to obtain more flexible conditions than those of your existing mortgage, you must carefully analyze the advantages and disadvantages of each of them.
So, if you choose to buy a variable rate mortgage, you agree to submit to market rate variations over the entire term of your loan repayment.
With this option, the base interest rate of your loan is likely to go down or up depending on market trends.
It should be noted that it is enclosed in a previously fixed and limited range. Whatever the level of increase, double the initial rate cannot be exceeded. It is clear that the risk incurred in terms of impact on the total amount is higher than in the context of a fixed rate credit.
However, this choice is quite attractive with more attractive rates at the start of the contract. The formula chosen by the applicant allows their best adaptation. In addition to being more advantageous than fixed rates at the start of repayment, variable rates are a judicious solution in the event of a rate increase.
The possibility for the borrower to benefit from suitable monthly payments when the rates fall and an increase capped at twice the initial rate constitute other benefits that you can derive from this choice.
However, keep in mind that if market rates soar, yours will also go up, which will increase the overall amount to repay to your lender.
By favoring a buyout of a fixed rate mortgage, you have a clear idea of the exact amount of your monthly payments to be paid until the expiration of your contract.
The rates are predetermined when you buy your current mortgage loan by subscribing to a new loan. Because they remain invariable over the life of your credit, they are advantageous when market rates are low.
A fixed rate thus offers greater security to borrowers. Don’t think, however, that it will always benefit you. Be aware that if your fixed interest rate is high at the start, it will remain unchanged even if a rate drop occurs during the repayment period of your loan.
Good to know before choosing a mortgage loan redemption rate
Whatever type of current loan you want to buy back by offering your property as a mortgage, you should know that the type of interest rate you choose affects the final cost of the transaction.
It is for this reason that certain precautions must be taken in order to benefit from the best possible conditions for your new loan. Whether it is the Capital Lender or any other Belgian credit institution that you want to contact, know that the supervisory authority (the SPF Economy) imposes rules to be observed.
In addition to the fixed or variable rate which must be indicated in the contract, other information relating to costs, such as the re-employment allowance, must appear in the legal notices.
Do not hesitate to determine the value of your property, the sale of which will reimburse the balance owed if you find yourself unable to pay your monthly payments.