Loan Rate Must Always Be Sustainable – Today And In The Future
June 13, 2019
With low mortgage rates, many households can make the leap from rented homes to homes. Loan rates remain manageable, even with larger amounts of funding, opening up many opportunities. The market is pleased about this development, many banking and financing consultants rub their hands. Because the more households can finance, the more deals attract.
Risk of low eradication
Unfortunately, it is not always advised in the interests of the customer. A key issue is the amount of the loan installment. As indicated, it is not high on most financings, so many people are able to raise mortgage lending. However, low monthly installments are by no means only due to interest on loans, often consultants only recommend the minimum repayment – which, depending on the bank and financing, often amounts to only one to one-and-a-half percent of the loan amount.
A low initial repayment has the consequence that the removal of the remaining debt is slow, ie even after several years, the amount of the remaining debt is hardly lower than at the beginning of the financing. While this may not necessarily be a problem, it should be ensured that the loan rate remains low for a long time, or preferably permanently.
Risk often overlook or concealed
This risk is often overlooked or sometimes concealed. For example, those who decide on a ten-year fixed-interest rate, pay little and supplementally take no measures to secure interest rates could experience their blue miracle in a few years. If market rates rise in such a case, the monthly rate will be considerably more expensive.
We therefore advise our customers to take interest rate hedging. At least if no rapid removal of the remaining debt is provided, this measure should not be missing. It ensures that the loan rate remains low over the long term and can therefore be spent effortlessly at any time.