In the broad field of mortgages, you can find different mortgage tracks, which have unique characteristics, and hence each track also has a number of advantages and disadvantages that are important to know. The mortgage tracks are determined by several important parameters, first, the type of loan that is suitable for the customer, A classic mortgagewith a fixed monthly repayment, a reverse mortgage for those aged 55and over that allows financial freedom without monthly repayments, or alternatively, a short-term balloon loanwhile examining the needs of the specific customer, while in the second stage we examine the right mix in the body of the loan.

In the case of a regular mortgage, it is usually a fixed-rate or variable rate mortgage, an index-linked mortgage or not, and even a mortgage linked to a foreign currency.

Payment of fixed interest linked to the index

As its name implies, a fixed interest payment is a fixed payment that does not change, together with an index-linked principal, which refers to the Consumer Price Index (an index that examines the percentage change over time in the expense required to purchase “fixed baskets” of products and services).

This mortgage track will include, in most cases, a relatively cheap interest rate, which, as mentioned, does not change at all and is its most prominent advantage. On the other hand, the index-linked fund may, obviously, expand the monthly repayment, along with the chance of paying early repayment fees in cases where we want to exit the mortgage track, whether to clear it or refinance it.

Payment of fixed interest that is not linked to the index

This is basically a mortgage track that has no characteristics that can affect the monthly repayment payment, which remains stable. This is actually the most prominent advantage of such a track, when on the other hand, its interest rate will be relatively expensive, and hence this track becomes unworthwhile for quite a few young couples, who prefer to avoid paying a larger amount of interest in advance, in view of the stability of the track.

The Differences Between Indexed and Unindexed Fixed Interest Rates

It is clear to all that the interest payment in the unindexed fixed interest rate track will be more expensive than the fixed and indexed interest rate. In 25-year CPI-indexed tracks, the interest rate will be 3.87 percent, while the unindexed track will be 4.55 percent, making it 0.68 percent more expensive.

If the index is based on an annual average that reflects the difference between the two tracks, then there will be an equality between the two. On the other hand, in cases where the index is higher than the annual average of the difference between the two tracks, then the fixed-rate and unindexed mortgage track will be more worthwhile, with a lower annual average reversing the situation.

From this it can be understood that all that remains is to make a rough estimate of which mortgage track is the most worthwhile. This is in addition to examining various other parameters, as these vary for each couple. This, as mentioned, further emphasizes the need to examine the rest of the data and parameters, both current and future, in order for the professionals to be able to direct you to the path that suits you.

Choosing Less Solid Routes

Alongside the tracks we presented earlier, there are also mortgage tracks with a high level of risk, due to the dynamic and variable characteristics that exist in those tracks. Choosing these tracks can, of course, be worthwhile, and here too you can find a wide range of solutions from the professional teams of the “Mani Group”.

One of the most well-known tracks under this category is the Prime track. The Ben track is not linked to the index, in which the monthly repayment is determined on the basis of the prime interest rate – an interest rate that changes every month and even every time there is a change in the prime interest rate. What actually makes the mortgage track less solid. On the other hand, the mortgage can be repaid at any point in time without paying an exit fee.

Key terms that are important to know when choosing a mortgage track:

–    Fixed / Non-Fixed / Prime Interest

–    CPI-indexed / unindexed fund

–   Consumer Price Index

–   Monthly repayment

–    Repayment of the mortgage

–    Low / Medium / High Risk Level