Mortgage loan – A fixed or variable interest rate
The mortgage loan is the loan that you can take out when you want to buy or build a house or apartment. Given that this usually concerns large amounts, a default period of 20 years is provided for repayments, but this can also be extended to 30 years. The interest rate is lower with the mortgage loan than, for example, with a loan for all purposes since the home serves as collateral and the lender therefore runs less risk. In addition, a debt balance insurance is also taken out to ensure the repayment of the loan in all circumstances. The amount that can be borrowed depends on your income and whether or not you borrow together with your partner. The interest rate varies depending on whether you opt for a fixed or variable interest rate.
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Although a variable interest rate is often initially lower, it does not guarantee the lowest costs when you look at the full term of the loan. A variable interest rate will be periodically revised in function of the economy of the country in which you borrow and can therefore fall as well as rise. So there is a risk involved. With the fixed interest rate you know exactly at the start of the mortgage loan how much you will pay in costs, but this is higher. The choice you make will usually depend on the period in which you start the loan and the size of the risk that you are willing to take. If you are going to simulate the mortgage loan in advance, it is important to take various scenarios into account with a variable interest rate. That way you won’t be confronted with surprises later.
Provide the necessary documents with a mortgage loan
If you want to take out a mortgage, you must submit more documents than just an overview of your income and fixed costs. Proof of purchase is also required. This usually concerns the compromise that is recorded when you decide to buy a house. The bank then knows exactly how much the property costs and uses this amount as the basis for the mortgage loan. Most lenders also offer the option of borrowing up to 130% of the purchase value of the home so that notary fees and the like are more covered. Request multiple loan quotes here so that you can make a comparison between the various providers and options in terms of interest rates.