Fixed vs floating mortgage rate
The räntebindningstid is how long your mortgage interest rate is locked. A rörlig (floating) rate follows the market and usually resets every three months. A bunden (fixed) rate is locked for a chosen period, typically one to ten years. The choice is a trade-off between the lowest likely cost and a predictable monthly payment.
Floating rate (rörlig ränta)
A floating rate is really a short fixed rate, most often bound for three months, that renews at the going rate each period. It has historically been the cheaper choice more often than not, because you avoid paying the bank for locking in certainty. The cost is uncertainty: your payment can rise from one quarter to the next if market rates climb.
Fixed rate (bunden ränta)
A fixed rate locks your cost for the whole period, so the payment cannot move even if rates rise. You usually pay a little more for that security. The catch is flexibility: if you repay the loan or renegotiate before the period ends, the bank can charge ränteskillnadsersättning, a fee that compensates it for the difference between your locked rate and the current one.
The interest deduction
Whichever you pick, mortgage interest is partly deductible: you get back 30% of interest up to 100,000 kr a year per person, and 21% on anything above that. Ränteskillnadsersättning counts as interest and is deductible too. This deduction only applies to loans with security, such as a mortgage, not to unsecured consumer loans.
Where it shows up
- Mortgage
Many borrowers split the loan into parts with different binding times, a räntetrappa. Part stays floating for flexibility while part is fixed for security, and the fixed parts mature in different years so you are never forced to renew everything at a single moment's rate. There is no rate that is right for everyone; it depends on how much payment swing you can handle.