The banks offer many different mortgages. See what the differences mean to you.
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When you want to raise loans for housing, you will not only meet many offers from banks but also encounter a concept jungle.
Fixed rate loans, frame loans, flex loans, home loans, mortgage loans, are some of the terms used. But often it is the same type of mortgage.
The challenge with all the types of loans available is that it makes the loan market unmanageable, “says Jorge Jensen, Deputy Director of Consumer Policy.. no.
– It would have been easier for customers if the banks had used the same names.
We provide you with an overview of the loan terms:
Traditional mortgage with floating interest rate
This is the loan most people have. You borrow a certain amount, get it paid and pay interest on the entire loan.
Floating rate means that interest rates always follow the bank’s adjustments.
Some choose a deductible period. This means that you only pay interest in the given period.
On the other hand, the deduction amounts will be greater when you start paying off because the loan amount is due to be paid down over a shorter period.
This is the loan for those who want a predictable private economy. One is offered a fixed rate over a given number of years.
Calculate what the loan will cost you
The financial newspaper has created this loan calculator, where you can calculate what the loan will cost per term (usually per month). When you add a percentage, it is usual to calculate a slightly higher rate than today, preferably four percent.
Which banks are the best?
To see which banks have the most favorable terms for your loan now, check f. example. loan barometer at Finansportalen.
The shortest bonding period is three years, while the longest can last up to 10 years.
Usually the interest rate for such a loan will be higher its longer term of office.
If you break such a loan before the expiry of the term of office and at a time when the market interest rate is lower than the fixed rate, you must pay the bank’s loss.
The reason is that the bank will lose money to borrow money back at a lower interest rate than the fixed rate. However, if the market interest rate is higher than the fixed rate, the bank resumes a so-called interest rate gain. They can pay them to you as a loan customer, but they are not charged.
Therefore, you should read carefully through the loan agreement before signing.
In the short term, such a loan will consistently be more expensive than a floating rate loan.
In the longer term, the development of the market interest rate will determine if this is a favorable loan for you to enter into.
A strong increase in market interest rates will make it more favorable to have interest rates, whereas in today’s situation, where Sven Gjedrem, among other things, signals a weaker interest rate trend, it will be uncertain whether fixed interest rates are favorable.
– This is a type of loan we recommend to a small extent, because it is difficult to predict whether a fixed rate loan will be more favorable than a floating rate loan, “says senior adviser in Finanslink, Sveinung Sulutvedt, the consultancy company.. no.
This is a loan where you as a customer act as your own bank manager. You control everything through online banking.
– Such a loan obviously requires a different kind of discipline than a traditional loan, where deductions are deducted automatically, emphasizes information manager Thomas Sevang in Nordea to click. no.
According to Finanstilsynet’s mortgage survey for 2009, this is the loan type which has had the strongest growth in recent years.
The loan has different names from bank to bank.
DnBNOR is called Rammelån, while Nordea uses the name Boligkreditt.
Such loans are granted for a maximum of 75 percent of the housing market price. Some banks have limitations over time, while others have free repayment periods.
If you want to interpret the Finance Portal’s mortgage lending barometer, the interest rate terms for such loans do not differ from the terms of other traditional mortgage loans.
In short, you will be granted a loan frame. Within this you can choose how much you want to borrow and you can pay off installments or borrow more money as you wish. But it is your responsibility to make sure that you are always within the total frame.
The interest rate on such a loan is always calculated by your loan balance and not by the total loan frame.
– Such a loan may make sense when you’re trying to brush up an old home. Unlike a regular loan, where you pay interest on the full amount but may not spend all, you only pay interest on the amount you have used at all times and not the entire loan amount or the frame, points to Sulutvedt.
When the loan expires, you must either pay the balance or refinance with a new loan.
– The negative with such a loan is that those who pay down a little can get a payment issue when the loan is to be redeemed, explains Jorge Jensen in the Consumer Council. “And again it could mean that housing wealth or equity will be low.
Some banks offer a floating rate loan option, but where interest rates can not rise above a specified ceiling. It is called mortgage lending.
This is the loan for those who want a certain predictability, but at the same time want the possibility of floating interest rates.
The interest rate on these loans will be slightly above the market rate. Nordea, which offers such a loan, calls the additional interest expense for the hedge premium.
This puts them on top of the usual floating rate.
In the same way as a fixed rate loan, it is also operated here with a fixed term.
If you pay the loan before this, the same rules apply as for a fixed rate loan: Penalty deposit if the market interest rate is lower than the interest rate ceiling and possible payment of interest rate gains if the market interest rate is above the interest rate ceiling.
This is the loan that is customized to first-time entrepreneurs, in the sense that you get the opportunity to borrow almost the entire sales price.
Usually there is an age restriction on such loans, and that you also do not get loans if you have borrowed to another property earlier.
– We find that banks have become far more rigorous regarding the safety assessment of such loans, explains Sveinung Sulutvedt.
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