How to switch your mortgage from a variable to fixed rate
Making the mortgage switch in Spain can cost between 500 and 1,000 euros
Those on variable mortgage rates, which are reviewed every six months, are feeling the largest impact of increased interest rates in Spain recently.
An average 150,000 euro home loan taken out over a 25 year period will be 228 euros more expensive after the upcoming review, representing an increase of 2,735 euros per year.
For this very reason, more and more people are negotiating with their banks to switch to a fixed-term mortgage. Even though the general interest rates are still remarkably high, paying the same amount each month offers a certain stability to struggling home owners and makes it far easier to budget.
Can I switch from variable to fixed rate?
The short answer is yes, but it will cost anywhere from 500 to 1,000 euros, depending on the bank, according to Tecnotramit. But while there are few mortgage offers with a fixed rate of less than 3% the experts still recommend making the switch, “because everything suggests that this upward trend will continue in the coming months.”
Since the conditions of a mortgage can be negotiated at any time during the life of the contract, Tecnotramit’s CEO stresses that homeowners who find a good deal with their bank should “sign as soon as possible.”
Government aid for making the switch
The Spanish government and the banks have a series of measures aimed at alleviating the mortgage burden of more than a million vulnerable families.
One of the main changes involves further reducing bank charges and commissions for those wishing to switch from variable to fixed-rate mortgages while expenses for early repayment will be scrapped from next year.
There are currently 3.7 million mortgages referenced to the Euribor and in recent years, the number of households contributing more than 40% of their income to home loans has dropped substantially. In 2021, the average life term of a mortgage dropped to 10 years and three out of four of these loans are granted at a fixed rate.
Image: Pixabay
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