Choose Mortgage Fix or Floating

  In a loan, debt, or credit, there is usually such a thing as interest rates. Credit interest is an additional fee that must be paid by the debtor, in addition to the principal installment value.

This credit interest applies also to mortgages (Home Ownership Loans). Also called mortgage rates. The amount of mortgage rates has been determined by the bank. It will usually follow the benchmark interest rate of Bank Indonesia (BI).

If the benchmark interest rate rises, mortgage rates go up. And if BI's benchmark interest rate is cut, the impact of mortgage rates will also fall, although there is a time lag for banks to adjust.

No wonder, interest rates become one of the considerations of many people buying mortgage homes. That's because, the interest rate will affect mortgage installments every month.

Therefore, people will definitely look for mortgage homes with low interest rates. The goal is to make the installments lighter. This is also what employees and civil servants (PNS) are looking for.

Types of Mortgage Rates

If you want to apply for a home loan, you need to know the types of mortgage rates that apply in Indonesia, among others.

1. Fixed Mortgage Rate

As the name implies, the prevailing mortgage interest rate is fixed or unchanged. You will pay the same amount of interest during the agreed period.

For example, it has been determined that the mortgage interest rate is 13% over a tenor period of 15 years. So, even if BI raises or lowers the benchmark interest rate, what you pay remains 13% interest.

Example:

Set tenor 20 years, installments per month Rp 5 million, interest Rp 1 million per year. So during that period, the value of interest paid remains Rp 1 million.

2. Floating Mortgage Rate

The amount of mortgage interest that must be paid by the debtor can vary. Adjusted for changes in bi and bank benchmark interest rates.

For example, if the beginning of the installment or the first year starts with 8% mortgage interest. Then in the second year, BI cut the benchmark interest rate, so the bank helped lower the mortgage rate to 5%.

It turns out that in the fourth year, there is another adjustment from BI by raising the benchmark interest rate. The bank also raised the mortgage rate to 7%.

3. Fixed mortgage and Cap interest rates

The type of fixed mortgage interest rate that does not change or the same for certain periods. And after the fixed interest period ends, floating interest rates apply, but with the amount not exceeding the cap interest rate.

For example, mortgage rates are fixed at 5.8% for 2 years, 6.5% fixed 3 years, and 8.75% for 5 years. If the fixed rate period has expired, then the floating interest rate applies,

This restricted floating interest for example banks offer cap interest of 12%. It is volatile, but the maximum remains 12%.

If the benchmark or bank interest rate raises to 13%, the interest cap that applies to you is limited to 12%. If it drops to 11%, the interest rate you get is not 12%, still 11%.

Civil Servants and Employees Are More Profitable To Choose Which Mortgage Interest?

Each mortgage rate has advantages and disadvantages. Maybe for some people, fixed interest is more profitable because it can provide certainty.

Worried that the policy of tightening liquidity or tapering off imposed by the U.S. Central Bank, will have an impact on bi's benchmark interest rate.

But there are also those who choose floating interest rates because they consider economic conditions. Where currently the trend is low interest rates, the economy has not improved, so there is still the potential for a rate cut.

Well, what about employees and civil servants? Should you choose which mortgage interest?

• Civil servants and employees should choose fixed mortgage rates with the longest period
• Civil servants and employees both get monthly salaries, so income is more stable. The number can even rise with the percentage of inflation plus economic growth, about 9-10% each year.
• But if you have a goal to pay off your mortgage early, choose a fixed interest rate that is not too long.
• For example, the fixed interest rate is set for 10 years, while you have a plan to accelerate the repayment of mortgage debt to 8 years only. Then you can choose fixed flowers for 8 years.
  

 Calculate Mortgage Rates Before Deciding

Banks must be competing to offer mortgages with various mortgage interest schemes. It seems that with the scheme, the flowers given are very cheap.

But not necessarily so. So, make sure you count the overall interest offered. Is it really cheap, or higher?

Most importantly, choose a mortgage interest scheme or its magnitude that is in accordance with financial capabilities. Because this also concerns the value of installments that you have to pay every month.