High interest rates with fixed interest, alternative flex loans?

My first home loan in 2000 was also a cheap variable loan. A term (5 years) and a tolerable interest rate cap were agreed upon. That gave me security that nothing could get out of control. Besides the very favorable interest rate, I liked that I could have terminated it at any time without costs. I hoped for falling interest rates... there was a trend... And that’s how it happened... after 3 years I switched and secured a low interest rate in a "normal" loan.

A loan with an interest rate cap (Cap) is, however, something different from a variable loan.

It was definitely called "variabel" back then.. The interest rate was too.. it was adjusted semi-annually. I believe the Euribor was already the reference for the adjustment at that time. It was impossible to verify that.. The internet did not offer such information yet.

It was definitely called "variable" back then.. That was the interest rate too.. it was adjusted semi-annually.

A CAP loan also has a variable interest rate that can be capped upwards and/or downwards. Like you, I assumed falling interest rates over the next 3 years back then, but of course I don't have a crystal ball.

Doesn't this passage make you suspicious?


I assume they mean a margin of 2.75% on the Euribor? Seems like a low margin to me. But with 0.5 + 2.75, otherwise you wouldn't get your effective annual interest rate. So why does it say fixed interest rate for 5 years?

The chance of winning this gamble is of course much better than in the lottery. But putting up my entire private solvency, that would be too high a stake for me.

Answer from the financer who deals daily with variable loans based on Euribor: 1. variable means new interest rate every three months (quasi interest rate fix for 3 months) 2. base 3-M Euribor (currently around 1.15 - you know the chart) 3. then the price = profit = margin for the bank ==> is exorbitantly high in your example with 2.75%, about 3-4 times what the bank earns on a long-term loan (this is because you can exit anytime), I sold a real loan (commercial and non-residential property) yesterday with a 0.93% margin 4. DSL Bank has an offer for a classic long-term loan with 5 years 5. DSL Bank's offer absolutely unrealistic. The refinancing of a bank currently over 5 years is over 3%. Therefore the DSL would lose money every month.