Variable-rate mortgage
What is the difference between a variable-rate and a Saron mortgage? Comparis highlights the pros and cons of variable-rate mortgages.
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The variable-rate (or adjustable-rate) mortgage offers large flexibility as it has no fixed term. Twenty years ago it was the most common financing form for residential property. Today it is less sought after. The high flexibility offered by the variable-rate mortgage has its price – it is the most expensive financing form. Furthermore, the adjustment of the interest rates is not regulated as clearly as with the Saron mortgage. There is therefore no absolute guarantee that decreased rates are immediately passed on.
Advantages
Can be terminated at any time if the agreed notice periods are respected.
Suitable for short-term financing of residential property, for example if the sale of property is due soon.
Disadvantages
Rather expensive, especially when interest rates are low
The pricing is usually not transparent.