Before choosing a real estate loan, you should ask yourself a few questions and compare the many different aspects. Don’t hesitate to draw up a table.
Is the loan at a fixed or a variable rate ?
Is the loan flexible?
What is the term of the loan, what guarantees are required (mortgage, surety bond)?
Does it open access to the APL or housing benefit?
What about additional costs (closing cost, cost of the mortgage or surety bond, cost of death and disability insurance, loss of employment insurance)?
Determine what the overall cash cost will be (which includes, other than the interest rates, all additional costs) and whether early payment options exist, with or without penalty.
For variable rates, you should also compare:
- The Euro Interbank Offered Rate (EURIBOR) and the margin used by the lender to calculate the interest rate: the first year is often based on a "base rate" and the second year rate can vary greatly to compensate for it.
- The periods at which rates are revised
- The effect of rate variations on monthly instalments, the repayment term, or both
- Is there a ceiling and if so at what rate? Is it a "capped" loan (a revisable loan the rate of which never exceeds a certain % fixed right from the beginning)?
- Can you switch to a fixed rate at any time? Is the rate fixed? Are there any conditions or penalties?
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