Luxembourg's lesson on home debt
I WOULD like to explain a very simple way to offer mortgages that will not necessarily break the bank. I lived in Luxembourg for several years where my mortgage was based on a slightly different method.
Basically, once arranged and agreed, a fixed repayment is calculated, after that, as interest rates rise and fall the length of time on the mortgage extends or contracts accordingly.
Let's say I need a mortgage for €100,000 and a 20-year term. I would agree with the bank the monthly repayments due at current interest rates and let's say that is €500, with a finishing date in April 2031.