It is important to know the important parts of your loan before signing under an official document. Moreover, it is of course important to ensure that you understand everything well, so that you will not be faced with unpleasant surprises later on. In any case, make sure that you are well aware of the fixed or variable interest rate. Life insurance can also be of great importance, so that you can borrow money in a sound way.
The fixed interest rate
If you opt for a fixed interest rate on your loan, you agree on a certain interest rate that you will pay for the entire loan. Keep in mind that the fixed interest rate also depends on market movements. It is possible that interest rates are now relatively high and will fall in the future, but it is also possible that interest rates will rise in the coming years. It is wise to take out a fixed interest rate when you want to know exactly what you have to pay, or if you expect the market interest rate to rise in the coming period.
The variable interest rate
With a variable interest rate you always pay the market interest rate at that time, which means that it can rise, but also fall. Your bank will continuously indicate what the interest rate is at that moment and when it will be lowered or increased. You are not sure about the amount that you have to pay monthly in interest, but you can count on the fact that the interest rate is usually somewhat lower than with a fixed interest rate. You take over the risk of decreases and increases from the bank, for which you are rewarded with a small discount.
The life insurance policy
Thirdly, in the case of a large loan (such as a mortgage loan) it is wise to take out a life insurance policy. In this way you ensure that (part of) the loan can be repaid in any case when your partner dies. The loans are usually contracted under two names, which means that in the event of a sudden death an unpleasant situation can arise, also financially. The life insurance costs a little premium, but on the other hand brings a high degree of financial security, which is certainly worth considering.