Anyone who considers taking out a mortgage to buy a home has to face an important decision that will determine whether they will pay a lot or a little in the long term: they must choose whether their interest will be fixed (constant forever), variable (dependent on the Euribor) or mixed (a mix between the two).
According to analysts at the financial comparator HelpMyCash.com, this is a dilemma that is difficult to resolve, given that "it is impossible to know if you will pay less in the long run with a fixed, variable or mixed interest rate." However, they point out that it may be advisable to opt for one or another modality depending on the profile of the applicant and, above all, their tolerance for risk.
The comparator's analysts affirm that "a fixed mortgage is better suited to a person with a low tolerance for risk." For a very simple reason: "your interest never changes, so the installments that will be paid will always be the same," they say from HelpMyCash. Opting for this modality, therefore, may be convenient if you fear the fluctuations of the Euribor.
Of course, it is worth keeping in mind that anyone who takes out a fixed mortgage cannot benefit from drops in the Euribor, given that their interest is a constant value that does not depend on this index. The client can try to refinance their mortgage loan to reduce the applied rate, but it will depend on their bank or other entities approving their request.
And what interest rate should a fixed mortgage have to consider it a good offer? According to HelpMyCash, "a client with a good profile can get a fixed rate of 2.75% or lower without having to take out bank products that cost money", such as insurance or others. Its analysts advise negotiating with several entities, with or without the help of a mortgage broker, and trying to get the best possible price.
On the other hand, this comparator comments that a variable mortgage may be convenient "for those who have a tolerance for risk and can cope with changes in installments." The interest on these products depends on the Euribor, so if it is quoted at reduced values, the client will pay a lower fee than with a fixed rate.
However, we must keep in mind that variable interest is a double-edged sword, because if the Euribor rises, the mortgage payment will become more expensive. And in the long run, the client can pay more than with a fixed interest rate if this index remains at high values for a good part of the repayment period. Therefore, it is important to calculate whether the monthly payments will be able to be paid without problems in the event that this more pessimistic scenario occurs.
Currently, banks offer variable mortgages with low spreads (which is added to the Euribor to calculate interest). According to HelpMyCash analysts, “it is not difficult to get variable rates from Euribor plus 0.49% if you haggle with the entities and have a good economic situation”; without having to hire associated products that cost money.
Regarding mixed mortgages, the first thing you need to know is that their interest is fixed for a first period that usually lasts between five and 15 years (it depends on each bank), which is normally lower than that of fixed mortgages. And once that period has passed, the rate becomes variable and depends on the Euribor; with a differential somewhat higher than that of variable mortgages.
So, who is this modality suitable for? From HelpMyCash they state that "its conditions are adjusted to a person who wants to pay a stable and affordable fee during the first years and who considers that the Euribor will not suffer very sudden increases in the medium or long term." Of course, its analysts warn that mixed mortgages can be a bad deal if this index falls in the short term and then prices upwards in the variable rate section, although this risk can be mitigated if capital is advanced and the term is shortened. to reduce exposure to the Euribor.
The best mixed mortgages on the market, according to the comparator's researchers, have a fixed interest rate of around 2.50% for the first ten years and around Euribor plus 0.55% for the rest of the term, which can be achieved with payroll domiciliation. As with the previous modalities, it is advisable to request offers from several banks (you can entrust this task to a broker) and negotiate to try to get a more competitive price.
