Are you going to take out a home loan, but don't know which rate to choose? First of all, it is important to emphasize that you can choose one of the following situations: Variable, mixed or fixed rate. What's the difference? There we go.
"Before proceeding with the credit, you need to consider what type of rate you prefer. If the variable rate, in which your credit installment will be lower at the beginning. But in which you run the risk of seeing your installment increase during the term of the contract. Or if you prefer to pay a higher amount, at least at the beginning, but you have the guarantee that this amount will not change during the contracted period", explains Doutor Finanças.
Learn what each of the three fees means, according to the company specializing in personal finance:
variable rate
"In Portugal, most mortgage loan contracts are linked to the 6-month Euribor rate. And this implies that your monthly installment is reviewed every six months. The value of this rate is lower compared to those charged at a fixed rate." , at least at the beginning of the contract. However, it must be taken into account that its provision may undergo significant changes over the credit term."
Flat rate
"Opting for a fixed rate, the value of your monthly installment will always remain the same throughout the contract. In order for the bank to reach a value of its fixed rate, it will have to evaluate, as in the variable rate, the risk of granting it. you a credit, the Loan-to-Value (ratio between the value of the loan and the property), the guarantees you will give and the risk of fixing this rate during the term of your credit agreement."
mixed rate
"This rate consists of contracting a fixed rate in the first years of the contract, which can be, for example, a term of 5, 10 or 15 years, and after the agreed period it changes to a variable rate. This means that in the first period your monthly installment is always the same, and after that period ends your installment is governed by Euribor."
Font: Notícias ao Minuto
