Variable-rate mortgages at a glance

2. What are the interest rates on a variable-rate mortgage?

Interest rates for variable-rate mortgages can fluctuate sharply on a regular basis. They also vary from lender to lender. You can find the latest developments in the mortgage market here.

3. Advantages of a variable-rate mortgage

A variable-rate mortgage offers various advantages over long-term fixed-rate mortgages or Saron mortgages:

• Maximum flexibility: you can terminate the mortgage at any time or switch to another model. The notice period is usually only three to six months.

• No minimum amount: there is usually no minimum amount for a variable-rate mortgage, so you can also take it out for smaller mortgage loans. 

• Low-interest phase: if market interest rates fall, your mortgage interest rates will also fall.

• Repayments possible at any time: you can make repayments flexibly, often without a minimum amount. As a rule, there are no penalties for early amortization, unlike with fixed-rate mortgages. The exact conditions may vary slightly depending on the lender.

4. Disadvantages of a variable-rate mortgage

Besides the advantages, variable-rate mortgages also have disadvantages compared to other mortgage models:

• Higher interest rates: variable-rate mortgages are generally more expensive than fixed-rate or Saron mortgages – especially in a low-interest-rate environment.

• Rising interest rates: a rise in the market interest rate will lead directly to a higher mortgage rate. As a result, the mortgage will be more expensive.

• Non-transparent interest rate: the interest rate is set by the financial institution and is not tied to a public reference rate. It is not always clear to borrowers how and when the interest rate is adjusted.

• No planning security: since the interest rate can fall or rise, you cannot plan the monthly costs exactly.

5. Is a variable-rate mortgage suitable for me?

A variable-rate mortgage is suitable for you if you want maximum flexibility. For example, because you are planning to sell a property or your financing situation will soon change. 

A variable-rate mortgage may also make sense for you as a temporary solution. For example, until you switch to a different mortgage model or when financing a smaller amount. 

However, a variable-rate mortgage is less suitable for people who need to be able to plan their ongoing costs exactly. If you can’t afford rising interest rates, a different mortgage model is better suited. 

6. How can I terminate my variable-rate mortgage?

You can terminate a variable-rate mortgage at any time, provided you observe the contractually agreed notice period. The notice period is usually three to six months. Submitting a written notice of termination to the mortgage lender is usually sufficient. You can find the exact requirements and the exact deadline in your mortgage agreement.