Mortgage vs. Mortgages – What Should I Choose?
For many years, the mortgage has been the cheapest solution for the Danes. That is why the vast majority of course have chosen it.
In recent years, however, there have been some changes that make the mortgage loan not necessarily the cheapest for you. Mortgages are bank loans with mortgage-like interest rates – and they are coming to stay!
Therefore, the mortgage is not always the cheapest
For example, in recent years the contribution rates have risen – and this is especially true for mortgages above 60% of the property value. At the same time, the central bank’s interest rate cuts have meant that the banks have liquidity, but not as many opportunities for good returns.
A few years back, specially covered bonds were introduced, which meant that banks now have the option of issuing bonds against mortgages on real estate.
All of this has meant that banks’ mortgage loans can be cheaper than traditional mortgages – and unlike mortgages, the price of bank loans cannot rise along the way during the term of the agreement.
When Should I Not Choose Mortgages?
If you have to buy a home with 60% mortgages or more, you may want to look for something other than a mortgage. For loans of between 60 and 80% of the property value, mortgage rates are highest, and this is why the bank can be a cheaper solution.
The bank can be more flexible
Mortgages operate in such a way that their loans are financed through the sale of bonds. Therefore, the payments also follow the sale of the bonds and this does not allow for a particularly flexible repayment of the loan.
At the banks, on the other hand, you can take out loans reminiscent of a overdraft facility where you can borrow at your convenience and repay at your convenience.
Mortgages are therefore good for people with greater fluctuations in their income and costs.
The risk of a mortgage loan
On the other hand, the advantages of bank loans being more flexible than mortgages also mean that the bank may in some cases require the loan to be repaid in advance.
At the mortgage institutions, you can always be sure that if you comply with your part of the repayment agreement, you will be allowed to keep the loan for an agreed period of time – even if you go bankrupt, lose your job or other circumstances change.
Banks, on the other hand, usually have clauses that may require you to repay the loan ahead of time. This can be a problem if you have just gone bankrupt and thus cannot necessarily get a loan from another provider.
What should you choose?
Exactly what loan is best for you depends on how much ice cream you have in your stomach and how stable your financial situation is.
Mortgages are safe and stable, but bank loans can be made cheaper and more flexible.
The most important thing is that you also read it in small print on your contracts – so that clauses and the like do not get behind you when you are in the fat barrel.