Do you need to apply for a mortgage?

There are decisions in life that are not easy; Choosing the financing of your home is one of them.

Therefore, we analyze the pros and cons of fixed and variable mortgages in 2018. We analyze your case and recommend the most appropriate financing for your financial situation.

Do you need to apply for a mortgage?

Do you need to apply for a mortgage?

It is clear that there is no better modality than another, depending on your profile, your needs and your preferences will adapt better one or the other.

So that you know both in depth, we perform a brief analysis of pros and cons of fixed mortgages or variable mortgages in 2018.

PROS AND CONS of Fixed Mortgage

PROS AND CONS of Fixed Mortgage

Undoubtedly, this financing of housing is the most common, and it may be why it is the one that less surprises and more security and stability brings to the user. But it has another set of advantages and disadvantages that you might not know to help you decide between one financing or another.

PROS:

  • The interest does not vary: The best known advantage and the one that provides the most security to the user. The fact of having the security and confidence that the interest to be paid is always going to be the same and that the interest to be paid does not depend on external economic factors such as the Euribor is a great reason to opt for this type of credit.

  • Little risk: Without a doubt the risk offered by this type of financing is very low.

  • Reduced term: Although the fixed rate is higher, the repayment terms are shorter, therefore, this will mean a lower long-term cost.

  • Affordable conditions: Banks are offering more and more advantages and flexibility when contracting a fixed rate financing . We can find them with an interest below 3% and with terms that can be extended up to 30 years.

CONS:

  • Higher interest: Interest is higher and having shorter terms, monthly payments end up being higher.

  • More commissions: One of the characteristics of this modality is that they have more and more expensive commissions, such as the opening commission or the risk for the interest rate.

PROS AND CONS of the Variable Mortgage

PROS AND CONS of the Variable Mortgage

This type of financing involves a certain risk, since interest fluctuates depending on the reference rates, such as Euribor or IRPH. We show you the pros and cons of hiring this type of financing.

PROS:

  • Longer repayment terms: Allow to extend the financing years more.

  • Fewer commissions: They usually have fewer commissions and tend to be lower cost.

  • More economic in the short term: At the time of hiring the type will always be lower, so in the short term it will be more economical for the user.

  • They benefit from the changes: The fluctuation of interests varies according to external factors, one of them is the Euribor. In 2018 the Euribor is at record lows so it could be a good reason to decide on this financing.

CONS:

  • Unstable fees: Interest depends on external factors, so although it may be a pro if they are down, it becomes a counter when they rise. In addition, it is an instability and little security not knowing the exact amount that you will have to pay.

  • More expensive: Having longer repayment terms, you end up paying more interest in the long term so it will be more expensive. The more years the term is, the more we will end up paying.

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