The current mortgage panorama is marked by a circumstance that does not go unnoticed by those seeking to finance the purchase of a home: the Euribor continues to decline, opening up new opportunities for buyers. At the same time, banking entities are engaged in a price war, offering mortgage products with very competitive interests, both at fixed and variable rates. However, this favorable context can be a double-edged sword, as the portal’s experts point out. HelpMyCash.
Choosing between a fixed, variable or mixed mortgage is not a decision to take lightly.since it involves assessing risks and projecting long-term expenses. Experts emphasize that this election We should not rely solely on the current Euribor. Although the fact that it has reached record lows may seem attractive to those opting for a variable rate, this index is notoriously volatile. Therefore, the ideal type of mortgage will depend not only on the behavior of Euribor, but also on the risk tolerance and financial stability of the client. So which option is best for you? Below we analyze the characteristics of each type of mortgage loan and the customer profiles for which they are designed, taking into account the situation of the
This is the mortgage that suits you best
THE The fixed mortgage is characterized by its long-term security and stability. With this type of loan, the monthly payments remain unchanged throughout the duration of the contract, regardless of fluctuations in the Euribor. Fixed rate mortgages are therefore an ideal option for those who value financial peace of mind and prefer to avoid surprises in the future.
Currentlyfixed interest rates are around 2.75%, a historically competitive level. However, it must be taken into account that This type of real estate loan does not allow you to benefit from possible reductions in the Euriborwhich could mean paying more interest if the index remains low for an extended period. On the other hand, amortization or renegotiation commissions are generally higher than in other modalities.
Who is it ideal for?
- People with low risk tolerance.
- Families or individuals with tight budgets which require constant quotas.
- Those who prioritize stability in a context of fixed or limited income.
When is a variable mortgage better?
Variable mortgages are those which benefit the most from the current fall in Euribor. In these loans, the interest fluctuates according to this index, which can result in lower repayments when the Euribor falls.but also in an increase in payments if the index rises. This is an option for those who have a higher risk tolerance and the ability to cope with variations in their monthly payments.
Currently, Euribor fell to 2.691% (October 2024)which means more affordable short-term payments. However, it is crucial to keep in mind the volatility of this index as it could rebound in the future. Experts recommend calculating different scenarios to ensure that payments remain acceptable even in the event of a high Euribor.
Who is it ideal for?
- People with variable income and saving capacity face quota increases.
- Those who trust a long-term downward trend in Euribor.
- Customers willing to take risks looking for potential savings.
When is a mixed mortgage better?
The mixed mortgage combines the best of both worlds: fixed interest for the first years (generally 3 to 20 years) and variable interest linked to Euribor for the remainder of the term. This makes it a middle-of-the-road option for those who seek short-term stability but are willing to take risks in the future.
He The initial interest on blended mortgages is generally lower than that of fixed mortgages, which can result in more affordable payments during the first tranche. In addition, many entities allow you to renegotiate the conditions over the variable term with lower costs than a fixed mortgage.
Who is it ideal for?
- People considering canceling or amortizing their mortgage during the fixed section.
- Clients with savings capacity who prefer lower upfront payments.
- Those who plan to sell their house in the medium term and they want to avoid high interest at the start.
Key factors for choosing the right mortgage
- Risk tolerance: Those who prefer long-term stability should opt for a fixed rate, while riskier ones can take advantage of variable mortgages.
- Savings capacity: Blended mortgages are ideal if you have a financial cushion to allow for early repayments.
- Economic outlook: If the Euribor continues to fall, variable mortgages could be cheaper, although their evolution still remains uncertain.
Which mortgage is best for you according to experts?
There is no universal answer. The choice between a fixed, variable or mixed mortgage will depend on the client’s personal circumstances, risk tolerance and financial situation. But if after analyzing the options you still have doubts, from HelpMyCash, they explain that knowing the general trend can serve as a guide. According to the the most recent data from the National Institute of Statistics (INE), corresponding to August 2024, the The majority of Spaniards continue to rely on the security of fixed-rate mortgage loans. Specifically:
- A 61.3% of people who took out a mortgage to buy a house chose a fixed rate.
- He 38.7% The others opted for a variable or mixed rate mortgage.
Experts explain that this preference reflects a context in which buyers They value more the stability of constant quotas in the face of uncertainty which generates the behavior of the Euribor. Variable and blended mortgages have declined in popularity in recent months, although they remain valid options for those who prioritize potential savings or flexibility.
In all cases, the choice between a fixed, variable or mixed mortgage must be based on your personal situation: your income, your savings capacity and your risk tolerance. Taking the time to evaluate these variables will allow you to make an informed decision that ensures long-term stability and peace of mind.
