The rise of the Euribor has been a problem that has affected hundreds of mortgagors. Like any type of currency, the Euribor is an economic index that manages the different amounts and levels of loans to be made between banks.

As the prices of everything around us go up, so do interest rates, loans and everything else that depends on the world market. That is why the worrying situation that the rise of the Euribor is experiencing is worrying many people.

Rising Euribor: What is Euribor?

Before knowing about the Euribor Rise, you should know that the Euribor is an economic index that has been very popular lately; it refers to the price at which the different European banks lend money to each other. Just as people go to the bank for loans, banks also borrow and lend to each other in different amounts when required.

In simple terms, the Euribor is a benchmark index that is published every day and indicates the average interest rate used by a number of European banks. That is why, with the rise of the Euribor, many find a great concern regarding their investments and requested loans.

What is the Euribor for?

When you think about buying a house or real estate, you don’t always have enough money to carry out the transaction. That is why applying for a mortgage is a great opportunity for those who want to start building their home. The bank is in charge of investigating our profile and whether or not to grant us a certain percentage of the final value of the property, which we must return in due time and form.

In these cases is when the Euribor begins to act; to calculate the appropriate method to measure the correct interest rate of the loan to be granted. In this way, interest amounts are generated depending on each particular situation, taking into account the economic context of the moment.

Advantages and disadvantages of Euribor

As with any type of exchange currency, or anything related to money, there is constant change. Therefore, there are several advantages and disadvantages that we can find regarding the use and management of Euribor. Here are two advantages and two disadvantages:

One of the biggest advantages is the low interest rates. Although it depends on the economic context in which it is managed, the monthly interest payment usually tends to decrease.

Another advantage is the extended terms offered. This is a very flexible and affordable option for most people to repay the loan.

Regarding the disadvantages, one of them is the variation it presents. If there is an upward trend in the Euribor, the value of the installments will inevitably rise as well.

Another disadvantage is the uncertainty generated by constant change. As these are long maturities, it is almost impossible to calculate and anticipate the behavior of the Euribor in the future.

This new way of dealing with interest has its advantages and disadvantages, like everything else. It is worth clarifying that, in recent times, the Euribor is one of the most widely used methods for generating interest.

The Euribor hike and everything you need to know about it here

Now that you know all about the Euribor and the way it works in European commerce, you can understand what you are paying and how.

In case you still need advice on the subject, you can contact a legal advisor in legal services. A lawyer specialized in real estate and construction, who will help you with his years of experience in the market, to take advantage of the best opportunities.