Say you take out a Flexicredit for EUR 250,000 for a term of ten years with six-monthly interest and principal repayments. And say that the interest rate, based on six-month Euribor plus a margin, is 3.75% for the first period.
Barring any change, the interest rate for the subsequent periods will each be determined on the basis of the six-month Euribor rate.
On the first repayment date (after six months), you pay:
- Principal: EUR 12,500
- Interest: EUR 4,739.58
However, after one year you decide to take advantage of interest rates based on three-month Euribor.
In that case, you will repay EUR 6,250 in principal and EUR 1,869.29 in interest (based on an interest rate of, say, 3.48%).
Barring any change, the interest rate for the subsequent periods will be determined in each case on the basis of the three-month Euribor rate.
You decide you'd like greater certainty regarding your repayments, so after four years you opt to convert the Flexicredit into an investment loan with a fixed interest rate of 5%. Apart from the type of interest rate, you have to retain the features of your original Flexicredit (e.g. remaining term, outstanding principal, fixed principal repayment).
On the first repayment date for the new investment loan, you repay EUR 6,250 in principal and EUR 1,791.95 in interest.
This example, together with the indicated interestrate, is intended purely as an illustration and is not binding on the bank.