Mortgage rates are going up and the interest burden is too heavy
The bank called me yesterday and said my interest rate will go up by 0.6% starting next month. Apparently, due to the recent base rate hike, my mortgage rate is rising from 4.3% to 4.9% per year.
I've only had the loan for two years, and since it's equal principal repayment, the interest portion is still pretty high. My monthly payment is going to jump by nearly 200,000 won. My living expenses were already tight, and now it feels like my overtime pay is just going straight into interest.
Would it be better to consider switching to a different loan product at a commercial bank? Or should I lock in a fixed rate for three years before rates go up even more? I'd love to hear opinions from people who know their way around personal finance.
4 answers
Yeah, the interest burden is really big... My monthly interest went up by over 300,000 won, so I'm working a part-time job after work lol
It's worth considering switching, but start by comparing the early repayment fees and interest rates. These days, even commercial banks have good terms for converting from variable to fixed rates, so it's a good idea to get a consultation. I've heard there are 5-year fixed options too, but a rate lower than your current one isn't always the answer.
Well, that's a bit... If the rate goes up by 0.6%, does the monthly payment really increase by as much as 200,000 won? With equal principal repayments, the interest portion should normally shrink over time, so I'm curious how large the loan principal must be for the numbers to work out that way.
4.9% is still on the low side, so don't be too anxious. Considering the possibility of the base rate rising further, a 3-year fixed rate doesn't look bad either.