The Euribor does not fall at the rate that many mortgage holders who reside in Spain would like. This index, used in our country to calculate the interest on mortgage loans with a variable interest, fell from 4.16% to 3.609% between October 2023 and January of this year, but in February it rose again and stood at 3.671% . .
In parallel, banks have begun to offer fixed mortgages with lower rates; to less than 3% in some cases. It is logical to ask, therefore, if it is worth going from a variable interest rate to a fixed one to reduce the payment, either through an agreement with the entity or with a change of bank mortgage. According to the financial comparator HelpMyCash.com, the key is the client’s risk tolerance and the conditions that will be offered.
Tranquility in the face of an uncertain future
In the very short term, convert a variable mortgage into a fixed one by selling on account. At this time, the client can get fixed rates of around 3% or even lower, while if they maintain a variable interest rate, the value of the Euribor will be applied, which for now exceeds 3%, plus the differential that is established in his writing.
However, it is impossible to predict whether the Euribor will be below or above its current values in the short, medium and long term. And for this reason, HelpMyCash analysts consider that switching to a fixed rate may be convenient if the mortgage holder is looking for peace of mind. With a fixed interest, your payment will never change and you will be protected from the shocks that affect those who have a variable mortgage; for better and for worse.
On the other hand, if the client wants to take more risks and believes that the Euribor will be at lower levels than now for a good part of the remaining repayment period, continuing with a variable interest rate may be more convenient. Always, of course, that he can assume more expensive quotas in case he is wrong and this index prices upwards.
If you want to maintain a variable interest rate, the comparator’s analysts recommend renegotiating the differential to reduce it and thus make the current import of the installments cheaper. With the HelpMyCash subrogation simulator you can calculate how much the client would save if they change their bank’s variable mortgage to reduce the differential.
Interest does matter
If the client prefers to convert their variable mortgage to a fixed one to protect themselves from the Euribor, it is important that they choose a reduced interest rate. In this way, you will not only pay constant installments: you will also pay enormous monthly payments until the repayment period of your mortgage loan ends.
And what can be considered a reduced interest? The ideal is to get a fixed rate of around 3% or below, which is the average price currently offered by banks for this type of operations. In fact, if the client’s profile is good, the comparator’s analysts assure that a fixed interest of around 2.62% can be obtained; Especially if the conversion is handled by a mortgage broker.
It is possible, however, that the mortgagee will not find such attractive offers. In that case, you can consider switching to a mixed rate to enjoy a lower fixed interest rate for several years (later a variable rate will apply). According to HelpMyCash, there are banks that apply an initial fixed rate from 2.30% in the ten years following the conversion.
Sin commissions during 2024
Finally, the comparator reminds that the client cannot be charged commissions for converting a variable mortgage into a fixed or mixed mortgage in 2024. Royal Decree-Law 19/2022, extended to the end of 2023, prohibits banks from applying commissions if carries out an operation of these characteristics, either through an agreement with the entity (novation), with the transfer of the loan to another bank (subrogation) or with the signing of a new mortgage to cancel the current one.
Now, the other expenses associated with the operation will have to be paid. If a variable mortgage is converted to a fixed or mixed rate through a novation or subrogation, the client must pay the price of the appraisal of their home, which costs about 300 euros on average. And if you take out a new mortgage loan to pay off yours, you will also have to face the registration cancellation costs of that credit, the price of which is about 1,000 euros on average.
