Mortgage: 3.5% (5 year fixed) or 4.1% (10 year)?

[jeff4607]

@stephonydburghduff in ee they are much higher now

 

[stephonydburghduff]

@jeff4607 Yeah...the sentiments changed quickly for me - haha

 

[ee001]

@rivensoul I’d always favour a longer period with lower rate.

Investigate exit penalties so you know if you can overpay to clear it quicker, but still have the longer/lower flexibility.

 

[rivensoul]

@ee001 I have, as I wrote it's 2000€ max to repay early - or do you mean something else?

As for the period, a longer fixation always means a higher rate - if you mean the overall duration I am already looking at a 30-year mortgage, my question is about the interest rate fixation period actually.

 

[hessville47]

@rivensoul inflation is everywhere! Your payments at year 10 will be ridiculous, even if you are paying more interests..

 

[kmccune1]

@hessville47 Maybe, but this doesn't help unless their salary is not ridiculous at that point.

 

[hessville47]

@kmccune1 Why would it be? Usually salaries raise as well. Even more if he is a junior becoming senior anytime soon.

 

[evietheturtle]

@hessville47 Wouldn't inflation help them? The payments stay the same, but the money is worth less...

 

[vxh]

@rivensoul Who knows what rates will be like in 5 years. I assume higher.

 

[roger71]

@rivensoul I would go with longer fixed period.

But having said that, this still seems pretty high. I'm just in the middle of negotiating the refinancing of my apartment and I'm deciding between 2.10% with 10 years fixed or 3.48% with 15 years fixed.

 

[rivensoul]

@roger71 It is - I am in Czechia where there is only one bank offering mortgages in € (for customers earning in Euros). Since this is still a lot lower than CZK mortgage rates, they can get away with it

 

[roger71]

@rivensoul Wow. I'm in Croatia and for a long time you could pick whether you want it to be in EUR or HRK (they also offered it in CHF which brought a lot of problems and evictions at a later point). But since we're joining Eurozone in January now they're almost exclusively offering in EUR.

 

[rivensoul]

@roger71 Do you also get eurozone rates or is it based on the rate set by the Croatian central bank?

 

[roger71]

@rivensoul If you get it in EUR then Euribor. If in HRK then Croatian National bank rate, NKS.

 

[resjudicata]

@rivensoul I don't get it. What will happen after the 5 or 10 yrs fixed ? What will be the % ?

 

[evietheturtle]

@resjudicata You will have to negotiate a new mortgage with your bank then.

 

[rivensoul]

@resjudicata That's the thing, whatever % will be the offered at that moment. That's how mortgage rate fixation works

 

[evietheturtle]

@rivensoul In what currency? Those rates seem quite high for EUR....

 

[rivensoul]

@evietheturtle Euro. Indeed, it's high, those are rates offered by a Czech bank (well, the Czech branch of Oberbank). Since they are currently the only bank offering eur mortgages here (you must have income in euro to get one) they can ask higher rates.

 

[evietheturtle]

@rivensoul Why do you need it in EUR? Are you building your house outside the country?