The chosen mortgage and the duration of the fixed-interest-rate period will determine the longer-term costs. The financial possibilities, situation in life and individual goals of the borrower must be taken into account. Is the aim to keep the property for the foreseeable future or to sell it in the next few years? The duration of the contract and of the fixed-interest-rate period should be adjusted accordingly.
Secondly, the risk profile is extremely important: if, for example, a family attaches great importance to having a fixed budget and security, it would be better to opt for a longer-term fixed-rate mortgage. This type of mortgage offers ideal protection against surprises and a possible rise in interest rates.
Other short-term mortgage models should be considered if the borrower has a greater risk appetite and capacity. SARON mortgages or money-market mortgages are interesting when interest rates are moving sideways or falling. However, they are associated with greater risks of short-term fluctuations. Tip: in practice, various models and terms can often be combined in multiple tranches.