Interest rate fixation: what you need to know
The pros and cons of different fixation periods.
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Fixation is the period during which your mortgage interest rate doesn’t change. Banks in Slovakia most often offer fixation for 1, 3, 5 or 10 years.
Short fixation
A 1 to 3-year fixation lets you react sooner when interest rates fall. It also means more uncertainty – if rates rise, your payment goes up once the fixation ends.
Long fixation
A 5 or 10-year fixation gives you the certainty of the same payment for longer, which makes budgeting easier. The rate may be higher, and a fall in market rates will not automatically reduce your contractual rate. Compare any renegotiation or refinancing during fixation including possible costs.
What happens when fixation ends
Before your fixation ends, the bank sends you a new interest rate offer. At that point you can repay part or all of the mortgage without a fee, or refinance with another bank. It’s worth comparing offers a few months in advance.
How to choose
If your budget is tight and a higher payment would cause problems, a longer fixation usually makes sense. If you have savings and plan to make extra repayments soon, a shorter fixation may suit you better.
What the law says
The bank gives at least two months’ notice before fixation ends. If it requires a request for free repayment at expiry, submit it no later than one month beforehand. During fixation, the law also allows free partial repayment up to 30% of principal per calendar year, once monthly. Outside exemptions, actual costs may apply, capped at 1% of the amount repaid early.
Sources
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We checked these figures against the listed sources on the verification date. Bank terms and regulations change, so confirm them with the bank before you decide.