Discover the mortgage that best suits your needs

Did you know that, according to the National Statistics Institute (INE), in October 2023, 31,921 mortgages were signed? A number that again marked a milestone by exceeding 30,000 concessions in one month.

However, choosing a mortgage can be a challenging choice. Before making a decision, you need to analyze the different options well in order to choose the one that best suits your needs.

What types of mortgages are there?

• Variable.
• Fixed.
• Mixed.

When to choose a variable mortgage?

Variable mortgages are characterized by an interest rate that depends on an index – generally the Euribor – and can undergo upward or downward variations during the term of the loan, with weekly or annual reviews.

Opting for this modality brings with it advantages such as:

• Lower interest rates at the beginning.
• Longer amortization terms (up to 40 years in some banks).
• Reduced commissions.

However, it also presents certain challenges. Such as?

• Variability in payments if the Euribor increases at the time the contract is revised.
• Increased financial risk.
• Possibility of an increase in the total interest to be paid throughout the loan.

Why choose a fixed mortgage?

Fixed mortgages are distinguished by their unchanging interest rate throughout the loan period, which guarantees a constant monthly payment.

Its benefits include remarkable financial stability and the ability to anticipate future costs, since the contributions do not fluctuate with changes in the Euribor. But this option also has certain disadvantages, especially if interest rates fall. In this case the installment will not suffer any reduction, but will always remain unchanged.

It is important to consider that the initial monthly payments tend to be higher, due to the higher interest rate and relatively shorter repayment terms.

Blended mortgages: Are they a good option?

Mixed mortgages represent a fusion of the above-mentioned modalities. During the first years, a fixed interest rate is applied, which later becomes variable.

They guarantee a cheaper Nominal Interest Rate (NIR) for a period that can vary from 1 to 20 years, depending on the total agreed repayment term. This stability is not permanent, since after the fixed phase, the interest is adjusted according to the current Euribor.

What is the most convenient alternative?

As mentioned above, it is crucial to choose the option that best suits your personal needs. Everything will depend on your pretensions when applying for the loan, as well as the bank you choose.

Although the Euribor has shown an upward trend, there are signs that indicate that this increase could be approaching its end. If so, those with a variable rate mortgage could experience a favorable reduction in their monthly payments.

Our mortgage and financial advice service

Are you thinking of applying for a mortgage?

At KM2 Real Estate Services we have a financial advice and mortgage service. We find and manage the option that best suits you, with the best conditions.

Do you want more information? Contact our advisors or visit our real estate agencies in Barcelona and Madrid, we are waiting for you!