If you are thinking about applying for a mortgage loan and you are about to enter the comparator to verify the options you have, you must first know what the types of loans are, so you will know which one you need.
Mortgage loans can be differentiated by the type of rate applied to them
- Fixed rate: The fees to be paid for the mortgage loan will be the same from the beginning to the end. You can make pre-payments either by decreasing the amount to be paid and maintaining the term or by maintaining the amount and decreasing the term.
- Variable rate: Start paying less and then your fees will be updated semiannually or annually. The variation will depend on different factors such as inflation, the average of the main banks, etc.
- Mixed rate: Starts as a fixed rate, generally for a period of 5 years, then becomes a variable rate and adjusts to market values.
When does each one suit?
The fixed rate is convenient if you know that the income you have will be the same for the next few years, that is, it does not foresee any increase or decrease. It’s going to be safe, even though these rates may be a little higher. It allows you to have greater control of your finances.
In the variable rate there is a greater risk, as it may increase or decrease, depending on market values. That is precisely why the rates are usually a bit lower. If you have an emergency fund that allows you to face this possible increase or you know that your income will increase shortly, it is worth betting on them. The rate is calculated from time to time. Not always having a variable rate means that your fees will also vary, they can also maintain the same value and the difference in interest is added to the total credit.
The mixed rate, as its name says, will mix both options, so if you expect an increase but it will not be shortly, you can opt for the mixed option: Start paying the fixed rate and then move to a variable.
The type of credit depends on the current situation
And the near future of your income, so choose carefully. And above all, check your options! It is the only way to make a good decision. As always, the mortgage loan comparator is the easiest tool.