Getting a new job, getting engaged, starting a family, and other events all lead us to look for a new place to live. And if you’re looking to buy an apartment , Fixed rate or variable you’re also looking for a way to finance it. At Edifica, we present the two main types of loans : fixed-rate and variable-rate.
Difference between fixed and variable interest rates
A variable interest rate will change continuously throughout the life of the loan as a result of external factors, including the lender’s market position, the bank’s official cash rate, and the country’s economy.
A fixed interest rate , on the other hand, brazil phone number library will not change for the period you’ve agreed to lock it in, usually between 1 and 5 years. At the end of that fixed term, you can choose to reset the loan to the new rates offered or switch to a variable-rate loan .
Both types of home loans have their pros and cons, and what’s right for one borrower may not necessarily be the best option for another. To help you make a more informed decision, we’ve broken down each type of mortgage and explained what to consider when choosing one or the other.</p>
Variable interest rates
There are many advantages to taking out a mortgage . Specifically, variable-rate mortgages are more flexible but offer less certainty.
The vast majority of people choose to finance their apartment with variable-rate mortgage loans , largely due to the freedom and greater number of options they offer.
More than simply providing a greater level of convenience, paid media: what it is main channels and how to invest this flexibility can allow you to save substantial amounts of money over the course of your mortgage.
How so? Well, one of the key benefits of getting a variable-rate mortgage is that you can make additional repayments beyond your scheduled installments without penalty.
By doing this regularly, you may be able to drastically reduce the length of your mortgage, reducing the total amount of interest you’ll pay and ultimately getting a better return on your investment.
Additionally, with a variable loan agreement, you may be able to further strengthen your financial position if market conditions turn in your favor
The main benefit of a fixed-rate mortgage is the certainty it provides. Under this agreement, the interest on your mortgage is fixed at the rate you agreed to for a period
of time, for example, three years, meaning that even if your lender increases your interest rates during that time, usa b2b list your repayments won’t be affected.
Some fixed-rate products will allow you to make a limited number of additional repayments without incurring a penalty, but if you plan to make additional repayments on your fixed-rate loan, it’s important to first understand what this limit is.
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d=”Factores_que_debes_tener_en_cuenta_al_momento_de_decidir” class=”ez-toc-section”>Factors to consider when deciding
1. Plans
This would likely mean significant savings for you.
However, when deciding on an adjustable-rate mortgage, you should consider the worst-case scenario, which means having enough income or access to savings to support you if your monthly payment reaches the maximum allowed.
Therefore, if you plan to buy and sell your apartment in less than seven years, you should consider a variable-rate mortgage.
2. Market fluctuations and mortgage options
If you don’t plan to move within a few years of purchasing your apartment, a fixed-rate mortgage is preferable, as it gives you the peace of mind of knowing what your monthly payment will always be. .
If the interest rate rises enough, an adjustable-rate mortgage could cost you more than a fixed-rate mortgage over time.
How much risk can you afford?
Not only do you need to consider which mortgage best suits your lifestyle and personal finances, but you also need to face economic reality.
The economy is always changing, and interest rates will fluctuate throughout the term of your loan. However, it’s possible to estimate your future income and make a decision accordingly.
Finally, if you’re looking for an apartment, Edifica Real Estate has 15 years of experience developing projects in the most established districts of Lima and other cities.
You’ll find the best apartments under construction or ready to move in. If you’d like more information about our real estate projects , please contact us and we’ll get back to you shortly.