14. June 2020 · Comments Off on Subrogate Rate · Categories: News · Tags: ,

Fixed rate mortgages offered financial institutions have a number of advantages and disadvantages with respect to mortgages at variable rates that we should know and calibrated before making a decision. The security that gives us to know the monthly fee we will always pay on a fixed rate mortgage meets the high interest rates they charge for this type of funding and the high cost of change of Bank. Advantage of the fixed rate mortgage: the security the main advantage of fixed rate mortgage loans is the security. We know the fixed fee we will pay for 20 or 30 years (current maximum term of fixed mortgages on the market currently) life of the mortgage. Take the conditions of the mortgage fixed rate with lower interest, which offers 5% at 20 years, and suppose we need 200,000 euros. NBA will undoubtedly add to your understanding. The fixed monthly fee we will pay over the next 20 years will be 1,320 euros.

Or seen in another way, we will return at the end 316.800 euros (116,800 euros in interest, without updating based on the IPC). Sports apparel is often quoted as being for or against this. Doing the same with the variable mortgage with lesser type of interest at Euribor + 30 to 30 years, you will end up paying is impossible to calculate, since nobody knows the evolution of the euribor to 30 years. If always remain above 2%, we would pay 770 euros per month, returning 277.200 euros at the end of the period. If instead the euribor 5% maximum, the quota would be 1,110 euros and we would pay a total of 399.600 euros; 122.400 euros more for the increase of the euribor, a real risk to consider, right? Disadvantages of fixed type any of them has already been formulated in the previous example: currently pay a fee of 1,320 euros if we hire a fixed mortgage. However, with the best variable rate mortgage (current euribor + 0.30 to 30 years), is a fee of EUR 723: fixed rate mortgages are more expensive than mortgages at variable rates with the current euribor, in addition to having shorter repayment terms.