Faced with a soaring Euribor, which this month has been 20 points above the percentage of January (3.33%), those mortgaged at a mixed rate, for which the fixed interest term has already expired, and, above all, at Variable rate will be the ones that will suffer the most from the upward revision of the quotas. One of the solutions that the mortgage customer has at this time to reduce the impact of interest increases is to partially amortize their mortgage, in this way they will be able to reduce the payment quota or the term.
In the event that the mortgaged person has a savings cushion and wants to soften the monthly payment, they must choose to use the amortization to reduce the fee. Although, if you are interested in saving money in the long term, and more significantly, HelpMyCash’s mortgage expert, Miquel Riera, recommends opting for a shorter term. “The installment will remain the same, but since interest will be generated for less time, much less will be paid for this concept,” explains Riera. “In addition, the debt will be settled sooner”, he underlined.
However, the HelpMyCash expert recalls that in the event that the client is entitled to use the deduction for the purchase of a habitual residence – which allows up to 15% of the amount spent on the mortgage to be deducted (over a maximum of 9,040 euros) -, The savings could be greater if the fee is reduced instead of the term, since in this way the deduction can be applied for more years. Although he remembers that only those who are within the transitory regime can apply it (they signed the credit before December 31, 2012).
If you have a mortgage of 150,000 euros in which you want to repay 15,000, for example, this option would imply the elimination of 31 installments (from an initial 240 to 209) or, if the same number of installments is maintained, the rounding of 83 euros per month (you would go from paying 831 euros to disbursing 748). For a mortgage amounting to 300,000 euros and an amortization of 30,000 euros, 21 payments would be eliminated or, if we choose to amortize the installment and maintain the term, it would reduce the cost by 111 euros per month (from 1,663 to 1,552).
On the other hand, it should be taken into account that the amortization can also be total if you have the necessary money saved. Although in both cases it is necessary to assess that a significant amount of savings can be lost that could be invested in other financial products or that represents an economic margin in case of emergencies.
In fact, from the financial comparator Kelisto they explain that even if we have a variable mortgage we must do the math. If we can withstand the impact of the Euribor, it is very likely that with a low-risk savings product, depending on the interest we are paying for our loan, we can achieve a higher return than the interest paid on the mortgage. In that case, it is worth investing the savings for a year, redeeming them after the year has elapsed and amortizing. In this way, we will save on our mortgage through amortization, but we will also have obtained an extra return on our money.
Other factors to take into account is that banks may impose certain limitations when making partial repayments, for example, regarding commissions. However, this year, due to Royal Decree-Law 19/2022, financial institutions do not charge for advancing capital of a variable mortgage. Even so, entities usually allow repayments, for a maximum of 20% of the debt, at no cost.
Options to alleviate the rise in Euribor
Other options to mitigate the rise in mortgage interest are the change to a fixed mortgage. From Kelisto they explain that although this possibility has become between 111% and 127% more expensive in the last year, you can still find offers at 2.7% for a term of 25 years, which is the one that adapts to the average period to which They ask for mortgage loans in Spain. In addition, the cost of subrogation or novation has been significantly reduced in those entities that in November 2022 took advantage of the aid plan for the mortgaged approved by the Government.
Faced with this alternative, the comparator also proposes studying the option of moving to a mixed-rate mortgage, which offers the security of the fixed rate during the first years, “after this first stage, again, the mortgage would return to being variable and, therefore, Therefore, the user would again be exposed to the fluctuations of the Euribor.” However, it is a very interesting proposal for those who consider that they can save considerably during the first years, after which they will be able to choose to repay debt early in order to reduce the years that depend on the index.