Interest rate hedging for your mortgage
The instalment on a variable-rate mortgage can rise quickly when reference rates go up. Interest rate hedging brings predictability, but it costs money and ties you to a contract. In this guide you compare the options and decide whether you need a hedge.
You will need
- Your mortgage details from your online bank
- A monthly budget
- The bank's offers for interest rate hedges
- About an hour of time
Steps
Find out about your current loan
Look up the loan principal, remaining loan period, reference rate and margin. Most mortgages are tied to Euribor.
Test your interest rate risk
Understand a fixed rate
Understand an interest rate cap
Get to know an interest rate collar
Ask for comparable offers
Decide based on your budget
Build a buffer
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