I have to renegotiate my loan next quarter, how should I think?
You should think through your situation properly, preferably make a budget and prepare for the fact that you will have to pay more for the mortgage. Because it will most likely be like that. Compare the interest rate at different banks and don’t hesitate to switch if you get better terms.
Will interest rates also rise in 2023?
Yes, most things indicate that. The Riksbank estimates that the key interest rate will be upwards of 3 percent at the end of 2023, but we’ll see how that turns out. After the latest increase, which formally takes place on November 30 this year, the key rate will be 2.5 percent. Expect the banks to add just over 1 percentage point to the policy rate.
I have variable mortgage interest, is it too late to commit now?
Well, all mortgage rates, even the fixed ones, have risen in the last year, so if you want to tie in at a very low level for a long time, you’ve probably missed that opportunity. But whether you should tie up or have movables depends on how your finances look and not least how long you intend to stay in your home. It is often possible to take fixed mortgages with you to a new home, but there are no guarantees that this will work. If you sell without buying new, you have to pay interest difference compensation to the bank and it can be expensive.
The negotiated average interest rates fixed for 3 years are currently just over 1.5 percentage points higher than the three-month interest rates. Choose to see the bond as insurance against higher mortgage interest and think about whether it is worth the higher cost.
Does the mortgage interest rate differ between different banks, is it worth switching?
Yes, it absolutely does. At Compricer, which compares mortgages, for example, the negotiated average interest rates for the three-month interest vary between 2.64 and 3.20 percent. But beware of banks that try to sell you other services with the interest rate as a lure.
Is it good to commit part of the loan or to have different commitment periods?
The advantage of different fixed periods is that you are phased into both a higher and a lower interest rate position. If you go from a loan that was fixed at 1 percent a couple of years ago to a three-month interest rate of up to 3 percent, the change is very big and sudden.
But be careful if you are planning to move and especially if you are not planning to buy a new home. Always ask the bank how it feels about moving with tied mortgages to a new home if you are thinking of tying.
Should I try to pay off as much as possible now that the interest rates are going away?
It depends on how your finances look and how large a loan you have in relation to the value of the home. First and foremost, you should make sure you have a buffer that covers at least two months’ worth of expenses. For example, if you have a house and are dependent on a car, you may need more.
If you have a buffer, you have to think about how much money you want tied up in a home because amortization is a form of saving. You can use the savings whenever you want, while the repayments are tied to the home.
Another thing to think about is whether extra repayments can take you below a limit where the monthly repayment will be lower. If you have a loan for 85 percent of the home’s value, you must repay 2 percent of the loan each year, in some cases 3 percent. If you fall below 70 percent, the amortization is halved to 1 percent, 2 percent in some cases. If the loan is 50 percent or less, you do not have to repay at all. Lower repayment rates can improve your monthly finances and make it easier to balance expenses and income.
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