When you conclude a loan agreement, there are several things that are also included in the notarial deed. It will, for example, be found at what interest rate you borrow, whether you have a life insurance policy, etc.
Our advice: Always ask your banking institution for a document with all the conditions of the loan. Read everything yourself, you would not be the first to have more eye for detail than the notary himself.
What does the level of the interest rate depend on?
The interest rate can be fixed or variable (variable). The level of interest rates depends on the economic climate at that time. The worse the economic situation, the higher the interest rate will often be. The interest rate also depends on a relationship with the banking institution. Are you known as a loyal saver or not, and are you a good or less good client.
Other things that can determine the interest rate are your profession (well-paid professions have a go-ahead), your family burden, or because you are eligible for a social loan. In addition, the level of interest will also depend on the size of the loan amount in proportion to the value of your property (the greater the difference between the two, the better). You will also receive a favorable interest rate if you take out the loan with a life insurance policy.
Golden tip: Always visit different banking institutions to negotiate the interest rate. You can be pleasantly surprised.
As mentioned earlier, the interest rate can be fixed or variable (variable). With a variable interest rate, you agree that the interest rate will fall or rise in proportion to the fluctuations of the generally applicable interest rate.
Fortunately, the law ensures that you as a borrower are protected against excessive fluctuations. For example, all loan contracts must state a maximum and a minimum interest rate. The adjustment must also be made at fixed times with a maximum of once a year. That way you won’t be confronted with surprises. By the way, during the first 3 years, an increase of at most 2% can occur.
Your loan can be cheaper than expected, but it can also be more expensive. It is therefore not surprising that the variable interest rate is usually lower than the fixed interest rate at that time.
The life insurance policy
Suppose you have taken out a loan and you are the only breadwinner. But you suddenly die. Just to deal with such a situation you can take out an insurance policy, a life insurance policy. You hereby pay a premium to the insurance company, which in return pays the loan in full or in part if you die before everything has been fully paid off.
Note that with a life insurance policy the insurance company will pay out an amount either during the term of the loan when you die; or at the end of the loan, if you are still alive.