I want to get a loan and buy a house. I’ve read plenty of information in banking sites about the interest but i would be grateful if someone could make it clear for me what’s the difference in the fixed and floating interest rate in a 200.000 Euros mortgage loan
In: Economics
A fixed rate loan is just that. The interest rate is fixed for the entire duration of the loan. A variable rate loan has an interest rate that may fluctuate. It may increase or decrease throughout the duration of the loan. If the economy takes a turn for the worse, the interest rate may increase. If you take a fixed rate you’re protecting yourself against the rate increasing. However you’ll end up paying more should the interest rate drop. Try and find a time line showing the interest rate over the past X number of years. It’ll show you how big the real life fluctuations have been.
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