Found your ideal home? All that’s left is to find the right financing. The interest rate will determine the amount you have to pay in interest as well as the capital borrowed. Everything you need to know to make the right choice.
This type of rate lets you know up front what your monthly payments will be for the entire term of the loan. This option gives you greater control over your expenses. A sense of security when it comes to your budget.
You will not be able to benefit from any reduction in interest rates and early repayment may be subject to charges. However, under certain conditions and subject to the bank's agreement, a fixed-rate loan can be transferred to another property when you move.
A variable rate loan adapts to changes in interest rates. The variable rate is determined by the bank when the loan is taken out according to its refinancing costs and the sales margin agreed on a case-by-case basis with each client. This rate can rise or fall throughout the term of the loan depending on financial market conditions.
When interest rates rise, the bank will adjust the rate applied to your mortgage accordingly. A rise or fall in the rate will therefore have a direct effect on your monthly repayments.
An adjustable fixed rate is an attractive offer that lets you additionally benefit from the security of a fixed rate over a set period.
At the start of the contract, you and your adviser will agree on an initial period during which a fixed rate is to be applied. At the end of this period, the rate will be subject to review and you will be free to choose a new type of interest rate in line with current market conditions (variable, fixed, adjustable fixed or any other type of rate available on the day you make your decision).
It is also possible to combine these various options by allocating different types of interest rate to each tranche of your loan.
This option allows you to play it safe for an initial set period. When the fixed rate expires, you will then be able to renegotiate all the terms of your mortgage. You can reduce the residual maturity, repay part of your loan free of charge, and renegotiate the interest rate – in line with the most advantageous option at the time as well as for the remaining term of your loan.
Variable, fixed, adjustable fixed – each option has its own advantages and disadvantages that you will need to consider carefully before signing your contract.
When interest rates are at their lowest, a fixed rate is without a doubt an option worth considering, as you will benefit from an advantageous rate for the entire term of your contract. This type of rate also gives you greater control over your future expenses, which can be reassuring for people looking for security.
On the other hand, when interest rates are high, a variable rate may be the more prudent option: if interest rates were to fall in the future, your monthly repayments may be adjusted downwards when you review your rate. A variable rate is also encouraged if you plan to repay your loan early, which you can do without having to worry about charges or penalties. Please be aware, however, that this type of loan carries a greater risk than fixed-rate financing.
With its greater degree of flexibility, an adjustable fixed rate allows you to benefit from the stability of a fixed rate during an initial period determined when the contract is signed, while leaving you able to choose a different option in the future, which might interest you if you have career prospects or significant funds to invest in the short to medium term.
Make an appointment at one of our property valuation centres
Your devoted BGL BNP Paribas Team, 10/12/2024
Subject to approval of your application by the bank.
