When choosing your first home loan you have to make a useful assessment fits their needs and their own personal characteristics.
Among the first home mortgages offered by the bank are:
Fixed rate mortgage: a loan granted by the bank or financial company with a constant interest rate throughout the life of the mortgage. The fixed-rate loans have the repayment amount with a known constant over time since the inception of the contract.
Mixed rate mortgage: a loan granted by the bank or finance company that provides contract for a modification of the interest rate from variable to fixed and vice versa during the term of the mortgage. The borrower requires a mixed rate mortgage to protect itself from fluctuations in the financial market and ensure a minimum teaquillità.
Adjustable rate mortgage provides an interest rate linked to fluctuations of a financial index reference, the Euribor. Based on the performance of the financial market, the amount of the mortgage payment can vary: upward when the Euribor rises, down when the index falls. So the amount of the installment in variable rate mortgages, depending on market developments related to the period for payment of the new installment.
Mortgage constant rate. is a variable rate mortgage installment which remains unchanged in the course of the loan and change is only the repayment duration. The advantage of the constant rate formula is the ability for the borrower to repay the debt incurred whilst paying the same amount per month if interest rates were to rise because of their rise in financial markets, the rate remains unchanged with a lengthening duration, whereas, if rates were to fall, the duration is reduced.
Adjustable rate mortgage with CAP: a mortgage whose interest rate varies based on the performance of the benchmark index (Euribor) but can not exceed a certain threshold (the CAP), which determines the maximum amount of the installments. It 'a good compromise formula between the fixed-rate and variable-rate loans, as the borrower can expect a decline in market interest rates to enjoy the benefits of the variability and, at the same time protecting it from excessive swings upward with the presence of the cap.
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