Learn how interest rates work on a home loan

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One of the main points when looking for a home is the financing you will use. Because it is such a large purchase, it is not advisable to do it in cash, so most people decide to resort to housing credit.

But it is not about choosing any credit

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To find the one that suits you, it is necessary to take into account interest rates, commissions, among other aspects. If you still do not understand how interest rates work in these cases, consider the following points:

1. Each entity charges a different fee 

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Although there is an average, there are financial institutions that charge higher rates than others, this means that, while in one bank it ends up paying X interest, in another it may be more or less. That is why it is necessary to compare the alternatives, since that will help you calculate which one is the most convenient.

2. Rates can be fixed or variable 

2. Rates can be fixed or variable 

There is the possibility of having a fixed rate or a variable. With the fixed rate, you will pay the same from the beginning of your credit until the end, that is, you know exactly how much you will pay month to month. With the variable rate, the amount to be paid may vary depending on several factors. To give stability to your finances, the most advisable is a fixed rate.

3. There is the option to finance in UVR 

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Known as the Real Value Unit, which is established depending on the Consumer Price Index (CPI). If this value goes up, so will the UVR, and as a consequence, your monthly fee will increase. Within each rate option you can also validate how your fee will be.

4. If you finance in UVR, you can always return to pesos 

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If the value of the UVR increases too much for your taste, you can carry out the procedure to transfer to pesos.

Remember that in addition to the interest rate, there are other points to review such as the term, commissions, requirements and down payment. For more information, you can use the Sut Lovingood home loan comparator.

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