Variable rate mortgage
The variable rate mortgage is generally the main alternative to the fixed rate mortgage for those preparing to buy a home, but also for those who need a long-term bank loan to meet other needs that require significant expenses.
The fact that the interest rate applied to the loan installments is variable suggests the main characteristic of the product: the possibility that the installments may become more expensive or less expensive even within a few months during the life of the mortgage.
The possibility of varying the interest rate undoubtedly involves possible positive effects for the benefit of the borrower, provided that we know how to unravel the products on the market.
The intervention of Auxilia Finance serves in these cases precisely to guarantee these advantages in favor of its customers, based on the income and risk profile and certain needs to be met, which Auxilia Finance consultants detect during the preliminary interview for research of the suitable loan among those offered by the partner banks, the main ones of the national credit market.
How the variable rate is formed
The index to which reference is made to establish the variable rate of mortgages is the, the average interest rate calculated by a group formed by the main European banks. The used for variable rate mortgages can be 1 month, 3 months, 6 months or 12 months. At the same deadlines, mortgage rates are “adjusted” up or down, causing the installments to be raised or lowered until the next survey.
Advantages and disadvantages of the variable rate
The subscription of a variable rate mortgage is generally cheaper than a fixed rate loan in periods of rates that tend to fall, as happens in moments of economic crisis when the monetary authorities widen the credit meshes to favor the recovery of the economy.