How do you choose the right mortgage loan?

Record low interest rates on mortgages give you many opportunities. You can secure low interest expenses for the rest of your life. How do you choose the right mortgage loan?

The three choices

A loan with a fixed interest rate of 2.5% over 30 years, that is what you as a new home buyer are currently looking at. It offers very low services, and most Danes with owner-housing ambitions have the opportunity to buy cheaper than it costs to rent. Historically, it is also cheap – in fact, it has not been so cheap since before World War II. Therefore, you should seize the opportunity while it is here.

You will find the right mortgage loan through 3 choices. Interest type, which is the most important, deducted size and maturity.

How to choose the right mortgage loan

Fixed or variable interest rate

You should start by examining whether a fixed or variable rate is best for you. It is a matter of risk. Both loan types are at risk. The variable interest rate thus gives you unlimited risk, while the fixed interest rate gives you a limited risk.

It is therefore about both purely objective criteria, such as how much an interest rate increase will affect your finances, or whether you already have a high risk on your wealth from an increasing interest rate – and on some subjective conditions as if you can sleep at night If you choose a variable rate. For this last consideration, it must always be said that interest rate increases can happen quickly (and often have done over time). So you should NOT expect that you can do anything if interest rates rise.

You also need to look at the likelihood of an interest rate increase, but don’t use counselors to predict this. Here the story shows a very poor hit rate from the experts. However, you can tell yourself that the lower the interest rate will be, the closer we are to an interest rate increase. This factor must be taken into consideration when choosing a repayment / maturity.

Fixed or variable rate – what type of loan should you choose?

The deduction must be raised

The lower the interest rate in the community, the more you should pay off on your loan. For example, if you choose a 30-year fixed-rate loan today, the benefit on this loan is only half of what the benefit was on a loan of the same type 10-15 years ago. If you choose a floating rate loan today, then you should think about reducing the risk of withdrawing quickly.

That is, the more revenue you have and the safer they are, the more you should deposit as a fixed installment on your loans. A loan with a 1-year variable interest rate could thus be deducted at approximately the same cost per month today over 10 years, which it took 30 years to withdraw the loan 10-15 years ago. It is worth remembering.

In this context, you can choose to ask yourself how quickly you can pay off your loan? For example, a 10-year loan with a 5-year variable interest rate is an opportunity for you even if you are not at variable interest rates?

The maturity can be freely set by you, so when you have chosen the interest type, then you can do the maturity as short as possible.

The possibilities are many in the market at the moment, so remember to use them in your personal finances.

What does it cost to change a mortgage company?

 

New mortgage loan can be good for you

 

Mortgage customers are unhappy after the massive increases in the rates of contributions in recent years. Therefore, the mortgage credit industry has been in the defensive for a long time, but now there may be changes on the way. Realkredit Danmark (RD) has just launched a new mortgage loan.

Companies can compete on price or quality, for all industries. In some markets, the products resemble each other so much that they only compete on price. This is the case in the mortgage credit sector – all providers offer virtually the same products.

The problem is that mortgage providers are very reluctant to compete on the whole because customers are very much tied to their company. There has also been a common understanding in the industry of when to compete. It is, of course, completely unspoken, for everything else would be illegal.

Therefore, you pay too much for your mortgage loan

Predict signs of more competition on mortgage credit

In recent years, the BRF has been playing the naughty boy in the class by not raising the prices of much of the products when the other providers raised their prices. And it has actually given a little more competition in the market than we have seen before.

In addition, an independent mortgage company named Boligejernes Realkredit has announced its arrival on the market. It is an exciting initiative that is certainly needed in the market if it succeeds.

Customer-owned mortgage company on the way

The new mortgage loan from RD

What makes an old reputable mortgage company like RD when it is not possible to compete on price? It product develops and competes on quality instead, and it is also good for you as a customer.

RD’s new product is FlexLife, and is a 30-year variable rate and variable rate loan. This means that the loan can have a residual debt at maturity – but never more than 60% of the property value.

FlexLife is suitable for many different kinds of families who have an overview of their finances. It therefore requires advice before you can choose this product. In return, it gives you many opportunities to be flexible in your budget options.

You can only borrow up to 75% of the property value on the loan’s admission. If you borrow up to 60% of the property value, you have the option of a 30-year grace-free loan. All in all, FlexLife is a loan many Danish families can consider as part of their loan portfolio. Especially young families and retirement families with variable repayment options or savings needs can benefit from the new loan.

It may not be long before other mortgage companies are on the line with similar products – and then the market is back to the status quo. All in all, however, this development is an advantage for you as a borrower because it gives you more loan opportunities – and then it gives a little more competition in the mortgage market.

 

 

Consumer loans are married to your personal finances

Consumer credit lures you to spend money you don’t have and destroys your long-term spending potential. How to avoid consumer loans.

Unnecessary consumption and unnecessary loans

Image result for consumer loanConsumer loans have very high interest expenses, and the money usually goes to expenses that do not provide lasting value in your personal finances. It can be a journey or a computer that you want, but you can’t really afford with your current economy.

The high interest expense on a consumer loan means that your finances will run with the handbrake on. A consumer loan gets the interest rate effect that would otherwise have to work to build your fortune to work against you. You lower your savings and risk completely removing it.

In addition, consumer loans are often marketed to young people and families, where these loans are extra harmful, as this group typically has poor conditions for saving.

Are you dependent on loans?

Expensive consumer loans

Image result for consumer loanThe terms of the consumer loan mean that the annual costs often reach 15-20% or more. In those times when interest rates are low, inflation is low and the value of the interest deduction falls, it is expensive to get behind with its savings at a young age.

It costs you DKK 50,000 to take a consumer loan of DKK 100,000, which you pay back over 5 years with annual costs of 20%. That way, you will pay 50% more for the item than everyone else. You shouldn’t have quite a lot of this kind of loan before it becomes completely impossible for you to save and secure your long-term consumption.

High rent loans destroy your finances

How to avoid consumer loans

It is best to completely avoid the consumption that makes you have to take consumer loans into a bank or a finance company. Always check the annual percentage rate – APR when considering borrowing. If YOU are higher than 8-10%, you must always refuse.

If you already have a consumer loan in a bank or in a finance company, you should increase your repayments and possibly convert to a cheaper loan if possible. Can you, for example, convert to a mortgage loan without extending the repayment period? Of course, this requires that you have real estate. However, this assumes that the loan has a certain size in order for it to pay, because there are high costs of taking up and rescheduling mortgage loans.

As far as possible, you should try to withdraw your expensive bank loans and consumer loans as soon as possible. It is about getting the interest rate effect to work for your economy and not against it. In a low-interest society that we currently have, consumer loans are very expensive.

Having a consumer loan in your economy is like driving a car with the handbrake pulled. It limits your long-term options.

Do you pay too high an interest in the bank?

 

 

The EU steals your low-interest loan

The EU steals your low-interest loan?

Mortgage loans have given the homeowners a very low interest rate during the financial crisis. But now it seems that one of the most important is abolished. Why is that?

Image result for low interest loanOne of the few positive effects of the financial crisis has been the falling interest rate on mortgage loans. The mortgage system is based on issuing bonds and selling them on the stock exchange.

It is an extremely liquid market which, even during the worst crisis (eg in October and November 2008), provides loans to the Danes. The system has proven its worth several times throughout history (since the 1790s) when the banks have not had enough money on the shelves.

The mortgage system has many advantages

From 2008 until now, the mortgage-credit market, for example, has provided Danish homeowners with loan capital at a falling interest rate, while the banks have continuously raised their interest rates and the interest margin over the same period. If Denmark had a money system similar to what is common elsewhere in the world, then Danes would have to pay more per cent more in interest on their loans.

The mortgage credit system is an important part of the housing market. It is an important prerequisite for the Danes to have many loans in their home, and at the same time it is an important part of fiscal policy in this country. By regulating the Danes’ access to loans, the Folketing can quite effectively boost the wheels or tighten up. They have done so many times over the last 50 years.

Interest rate adjustable loans under pressure

Image result for low interest loanIn the 90s, we received interest rate adjustable loans. A loan that challenges the Danes’ ability to understand their finances. But it also gives Danes the opportunity to always get the lowest interest rate on their loans – if they can tolerate the risk. Of course, it is the F1 loan – the one-year interest rate adjustment loan in question.

The loan that has given Danes access to the cheapest funding in Europe for 16 years is now under pressure from Europe. This is due to the fact that the other EU countries and the rest of the world do not basically understand the Danish mortgage credit system. As a result, they are too much like the banking market and the mortgage market.

The loan, which also held liquidity during the worst financial storm in 2008, is accused of not being liquid enough. The rest of the world is afraid of what happens when very large amounts of bonds are to be sold at the same time – as happens with F1 loans once a year. But that is not a problem and has not been before. Mortgage companies have, moreover, adapted the issues so that this happens many times a year today. When the interest rate adjustment loans were introduced, it only took place in December.

Special interests make it more expensive to be a Dane

If the other countries (especially England) succeed in removing the F1 loan from the shelves, it will mean that the banks will again be easier to compete with the mortgage companies. Of course, the major banking countries – including England – have a special interest in this. One can say that the banks do not mind that the Danish mortgage system is sabotaged in this way.

It is incomprehensible and completely unacceptable that other countries in this way can make it more expensive to be a Dane.

The Danish system should be the model

It is sad when considering a mediocre malfunctioning banking system in Europe and the rest of the world destroys the possibility of maintaining a good Danish mortgage credit system. It should be the other way around. The rest of the EU should see the Danish mortgage credit system as an opportunity to create a more stable financial market in Europe.

Therefore, you pay too much for your mortgage loan

Mortgage loans are too expensive. If you do nothing, you pay too much for your mortgage. Better rules should ensure real competition for mortgage credit.

What will you do if Brugsen puts the price up with 20% on all goods? What do you do if Shell deliberately sets its prices 10% higher than its competitors? You’ll find another place to buy milk, bread and gasoline – right?

But when Nykredit put up mortgage loans in the spring, the Danes did not react – at least not so far. In fact, figures show that Nykredit has increased their market share! Danish consumers have not fled from Nykredit despite poor media coverage and a management that deliberately aims to raise the price of many products. Nykredit’s products have become considerably more expensive than the cheapest in the market.

Lack of competition on mortgage credit

Much indicates that the mortgage credit market is too opaque for ordinary Danish families. It’s too hard to find out where to go to find a cheaper loan. This is partly because the financial products may seem complicated. But it also has to do with the lack of confidence that cheap products will remain cheap. There is no guarantee that the companies will not only raise prices again in six months.

It seems that customers have abandoned the mortgage companies. It does not last long, it is important that you as a customer respond to unreasonable prices. Most customers who get raised their mortgage rates can find cheaper alternatives elsewhere. This is especially true of customers in Nykredit and Realkredit Danmark, who have announced higher prices.

The contribution rates are rising – can you do anything?

The power of consumers

Both Nordea Kredit and BRF are trying to hijack new customers in the market, but that requires you to take the plunge. The only thing that can make financial companies change course is when customers go their way.

It became very clear when Danske Bank tried a new fee structure some years ago. It went really wrong and they had to say that customers actually have power when enough people respond and go to other providers.

Too few providers?

There are too few providers in the mortgage market for the necessary competition to arise between the companies in favor of consumers. It is too difficult to change the mortgage company with a loan of over 80%, and this prevents real competition in the framework of the loans. For example, there is not a single company that offers loans where the contribution rate cannot be raised after the loan is given.

What does it cost to change a mortgage company?

New rules must ensure competition

The Competition Authority should tell the Minister that the rules on the mortgage credit area are insufficient to ensure competition in the market. At present, it is the companies themselves and not the market that sets the price.

If the price of your mortgage is set up, you should do something about it. Examine your options for changing company. Can you get a cheaper loan somewhere else, so don’t hesitate to move your loan to the cheapest company.

 

 

Mortgage loans – 3 ways to decorate your home economy

Mortgages are an important part of the economy. If you choose the right home loan, it is of great importance to your finances. Choose from 3 ways to decorate your home economy.

Who determines the interest rates on the mortgage?

Image result for mortgageIf you choose the right loans with a risk that suits your personal finances and your temperament, you can use interest rate developments in society to get a better economy. It is partly about making use of the fact that interest rates rise and fall over time, and exploit the difference between the variable (typically semi-annual) interest rate and the fixed interest rate (typically the 20 or 30-year bond yield).

The movements in the interest rate simply depend on the growth in the world and Europe, and partly on how Denmark manages its economy. The difference between the variable and the fixed interest rate expresses the expectations of how long-term interest rates will develop in the long term.

The interest rate structure thus expresses trends for the development of the national economies, and it is this development that you can make sure the positive influence on your private finances.

Choose from 3 ways to customize your mortgage. Choose the option with the risk that fits your finances and your temperament.

Fixed or variable rate – what type of loan should you choose?

Mortgages running in roller coaster

Do you love when it goes up and down quickly? Always choose the mortgage with the shortest interest rate adjustment period – this is probably the cheapest long-term mortgage. Unfortunately, it is also uncertain both when it comes to the price of the loan and the effect on your personal finances. Over the past 20 years, the interest rate on a one-year adjustable-rate loan has fluctuated by 6 percentage points.

Historically, there have been very few periods when this type of loan has not been most advantageous. But be sure to consider whether you can endure the risk in your finances and whether the possibility of interest rate fluctuations can ruin your night’s sleep.

How to choose the cheapest mortgage loan

Mortgages with strap and braces

Are you taking no chances? Always choose fixed interest rates on your mortgage, but be sure to take advantage of the conversion right on your mortgage. As interest rates rise and fall, you can convert your mortgage loans – either to lower interest rates or to raise interest rates to lower residual debt. You must be very patient if you choose this strategy. For the past 20 years, with a loan of DKK 1 million, you only have to convert 3 or 4 times.

If you consistently choose a mortgage with a fixed interest rate, your personal finances are always safe, but your interest expenses are also higher than if you had a variable-rate home loan.

Make money from your mortgage

Mortgages that run fast with seatbelts

Do you prefer the golden mean? Choose 2 home loans and combine variable and fixed interest rates in your loan strategy. Take a variable mortgage loan that you are repaying to reduce interest expense quickly. Combine with a fixed-rate loan with a maturity of 30 years – possibly without installments. In that way, you put security into your finances and open up the possibility of reducing the residual debt if interest rates rise.

If you choose to combine a fixed rate and a variable rate mortgage, you can be sure that it is not the best solution, but you also know that it is not the worst.

How do you choose the right mortgage loan?

So when choosing a mortgage, you should not guess whether the interest rate will rise or fall. With a rewrite of Storm P, we can say that it is impossible to predict – especially about the interest rate.

Instead, think about how much risk you want in your finances. Which of the three options is best for you depends on your finances and how you are at risk.

 

The great guide on Swap loans!

Image result for swap loans

Are you one of the many Danes who in the last few years have gone and wondered what these swap loans that everyone is talking about are actually?

Do not worry. You are not the only one. Therefore, we have made a short article describing swap loans a little more in-depth, so you can hopefully be a little better equipped for talking to the bank – or if not, then at least when you have to talk to the dinner table, together with the rest of the “adults”. So if you are looking for a swap loan explanation, then you need nothing more than read on below.

As we have become more and more acquainted with different types of loans – and also as more loan types have become available to us, we have basically become wiser on the subject. For example, we all know about various terms gradually, such as consumer loans, quick loans, mortgage loans and so on. But what are swap loans?

In short, it is a “swap” loan where you change something for something else – in this case interest. In fact, when we talk about swap interest, the entire loan in itself trades that you swap one interest rate with something else. It may be that you change a flexible or variable interest rate at a fixed rate instead.

One of the most frequently encountered swap loans is when it comes to cooperative housing and cooperative housing associations.

A cooperative housing association is in principle an association that has a fortune. And when you spit yourself in the box, you own a share. Quite logically, right? The reason why often it is swap loans at cooperative housing associations is often that it is a lot of money in the association – a lot of money.

For example, if you imagine that your mortgage loan could become a half or a whole percentage cheaper by having to repay the loan to another type, then it may not be worth it – at least not when you consider what fees and other costs that can often be in the process of restructuring a loan. But in the case of cooperative housing, the case is a little different. Often, there are hundreds of members of an association who all have a debt or a fortune. It can turn into a lot of money – even if there are few percentages in interest. Therefore, you usually meet the term interest rate swap when you talk about these associations – simply because it can best pay off here.

The whole idea of ​​an interest rate swap is that a cooperative housing association, for example, can exchange one or more of their loans. For example, if they have used a variable interest rate, there may be various reasons why it may make sense to change their loan to a fixed-rate loan. It may be difficult to find buyers for the shares if the banks find that interest rates are starting to be too uncertain. It can also be adopted by the board in the form of budget plans. For example, in the case of major renovations to be depreciated over many years, it may make sense in the same time to make an interest rate swap. It ensures that all parties know the costs and benefits of their loans.

If, for example, a cooperative association is to make improvements to buildings, roofs, communal areas or the like, then this is often quite large amounts. Let’s make an example of a new tag. It may cost 10 million to repair, to be financed over 5 years. This means that the total number of co-owners must pay 2 million extra a year than they have previously done. To ensure that there is enough money, it can make sense to lock the interest rate so that you are not as exposed if it should increase. There it will make sense to make an interest rate swap.

It can also be the other way. For example, if you have had a fixed interest rate over the past 10 years – for example, through a period of poor economy, and you have an idea in the cooperative society that the interest rate will fall, then you can swap the interest rate with a variable one of the kind, and thus faster Obtaining repayment of swap loans than would be possible to redeem a traditional loan.

So in principle, a swap loan is really just a loan that can be exchanged for something else. It is thus not a fixed “product” one can find on the shelf at the bank, but must be interpreted more as a form of loan agreement that is flexible – at least within certain limits.

Often, swap loans are not subject to private individuals. For if all private individuals suddenly got access to swap loans, then there would in principle be no obstacle to changing their loan from day to day, which would make it extremely difficult for banks to set interest rates, plan and budget . So at the moment – and probably for the next many years to come – it is only relevant for large companies, housing associations and cooperative housing associations. Lisätietoja saat klikkaamalla tästä .

We hope that this article has helped you become a little wiser on swap loans, and that you at least have a little to offer for the dinner table. Generally speaking, swap loans may well be of a special size to work with – but fortunately this is typically not something most people will be affected by in everyday life – at least not unless they own a cooperative or similar.