In fact, there are currently two major issues that concern the credit sector and therefore the general public. One, how long does the low interest rate environment last? Well, we won’t answer that question right now. The other is about what kind of credit do we have? Is it primarily worth paying attention to interest rate variable or fixed?
What is the difference?
Although it seems clear, it is worth clarifying this point. Fixed rate loans refer to products with longer interest rates, while floating rate loans to short ones. The role of the interest rate period in credit agreements is extremely important, as during this period, whatever happens (meaning the increase in the central bank base rate), the amount of our monthly repayment does not change. From now on, if this period is only 3 months, you are more likely to have a change in your monthly burden than, say, 5 years. Let’s see what this means through a concrete example!
Let us count!
We will examine two extremes to make it clear why it is worth emphasizing this. As usual, let’s call the calculator of the loan.hu! Let’s calculate a loan that we take for 20 years and say $ 10 million. And this time also set the interest period to only 3 months.
The first offer we see is Hannah Bank Hannah Forint Real Estate Loan (Normal Terms), which is for $ 61,497 per month. So we will repay the bank a total of HUF 14,772,014 if…. It is very important that only if there is no interest rate increase in 20 years that we have little chance of.
Now, let’s do the same calculation, with the change that the interest period will be 20 years! In this case, the monthly repayment will jump to $ 77,529 and the total amount paid back will be $ 18,619,774 . The difference is significant. But here we know that whatever happens in the world, we will not have more expensive credit.
Such an article is not suitable for “telling the tutti”. Everything else is more important, either cheapness or predictability. However, we can say for sure that if you visit us, we will help you find the right solution for you. Feel free to contact us!