When talking about Spain, inflation has hit about 7,5% over the last 34 years! And I really noticed since last year, friends and other people are complaining about the more expensive electricity bills, the gasoline has increased and just everything is more expensive but the salaries stay the same. That’s not fair, but what can we do about it? At least when buying a property you will have to think very clearly about the loan you’re going to take on.
I’m in the process of buying a property myself now (YAY!), waiting for the banks to respond to my financial situation. At the moment I have 1 offer and waiting for ING bank to give me their offer for a loan.
One bank offered me for 30 years a fixed mortgage rate under 2%, like 1,70% if I’m not wrong. Then ING is offering me “Mixto” and “Variable”, which with Mixto, I would have the first 10 years a mortgage rate of only 1,15% and after that, it depends on how the rates are then… I’m afraid that it could go up a lot because I know in Holland they are raising already as well.
My financial broker told me I could step over from banks without costs whenever I want so maybe I’ll go first for the 10 years at 1,15% and still try to pay off as much as possible, and then choose which will be the best option to take.
Protect yourself from inflation
Very easy. First, save as much money as possible. Second, buy your second asset real estate with (or without) a mortgage and get a renter in the property who will pay off your debts, Find a good property that will increase value over the years, so when you’ll sell it, you earn even more money.
2021 was the best year since 2007 when it comes to buying real estate which were more than 500.000 properties!
This is what Idealista.com, a Spanish house searching webpage, recommends:
The reason being is because although Financial Authorities the world over are bending over backward not to increase the interest rates (to protect and secure the fledgling post-pandemic economic recovery), arguing that this inflation is only temporary, the fact is that given recent geopolitical events (read war) inflation is not only here to stay but will significantly increase over the course of the next years.
This translates into an interest rate hike, whether they want it or not, in the near future.
Now, which Loan is better? Fixed or Mixed?
The reason why fixed loan is better is that you for 20/30 years, exactly know what you will pay in any circumstance of the world. Pandemics, wars, crises, etc.
Mixed loan could be good when you will have the first 10 years a very low “fixed” rate and after the variable (which we won’t know what its going to be), but, are thinking of paying the dept of asap.
Read here another article of practical saving tips for first-time home buyers, or this article to know if you can better buy with or without an agency.
