You want to acquire real estate, land, do work or renovate your house. Now is the time, mortgage interest rates have never been lower on the market. Fixed rate or variable rate ? This is the question that you will inevitably have to ask yourself. The answer in a few lines.
Fixed rate or variable rate?
For several months, interest rates have been so low that we can only advise you to take out a mortgage loan with a fixed rate .
Why are interest rates so low?
The financial crisis is lastingly affecting Europe and the banks have no choice but to present very low rates if they want to revive the credit activity.
Why choose a fixed rate?
Interest rates on mortgage loans are so low that the trend for the coming years can only be upward. Thus, if you took out a mortgage loan today with a very low variable rate, this rate could probably only go up in the years to come. Let us not forget that a mortgage loan can last 25 years and sometimes even 30 years. Over such a period, many events can happen. Therefore, if you have the assurance today of guaranteeing yourself a low fixed rate for the next 25 years, why deprive yourself of such security?
When to choose a variable rate?
A variable rate mortgage is very attractive when interest rates are high when you take out your mortgage. Indeed, in this scenario, you may think that interest rates will go down in the years to come, which is not the case at present.
What drives interest rates?
Interest rates are set by the Cream Bank according to the state of public finances. Today, public finances are not in a good state in Belgium but paradoxically, it borrows at very low rates on the markets (sometimes even negative, which is a historic first). Why? Because the market considers that the finances of Belgium appear among the best in Europe and that Belgium offers important guarantees of solvency in particular thanks to a very important rate of savings.
When is it worth buying your mortgage?
You have taken out a fixed rate mortgage and you find that interest rates are very low now. You would like to redeem your credit and benefit from a lower rate. It’s possible. To make the repurchase of mortgage loan interesting, we advise you to wait at least 7 years after the conclusion of your contract. You should also note a reduction in your interest rate of at least 1% to offset the costs of the notary deed and the granting of the release of the mortgage registration.
Nothing beats a detailed case-by-case analysis
In this matter, we can only advise you to make an appointment with our brokers and to discuss your case in detail. There is no ready-made answer, but an analysis of your financial situation will allow us to find, together, the solution suited to your current situation.