Wednesday, July 6, 2022
Hipotecas

What is better variable mortgage or fixed mortgage?

During this year, many people have changed their variable loan to a fixed one. In this section, we show you the advantages and disadvantages involved if you want to make this type of change in your mortgage.

Differences between fixed and variable interest.
The interest rate is the price paid for the use of an amount of money during a given time. Its value indicates the percentage of interest that must be paid as consideration for using a certain amount of money in a financial operation.
There are two types of interest:

Fixed interest: In fixed-rate loans, the interest paid for the use of capital is always the same, the interest does not change.

Variable interest: In the case of variable interest, the interest on the loan is alterable. This variation depends on the interest rate that is taken as a reference.

Advantages when changing the variable mortgage for a fixed one.
When changing from a variable loan to a fixed one, the great advantage is that these interests are low and will remain low for the duration of the loan.
The same amount is paid every month, so by making this change you have a greater sense of security and peace of mind.

Disadvantages when changing the variable mortgage for a fixed one.
You have to take into account the great disadvantage of making a change from a variable to a fixed mortgage; assumes that, in a variable loan, if the Euribor falls, you would pay less, however, with a fixed mortgage, the decrease in Euribor would not affect your interest.

What is better?

The best option is the fixed mortgage if what you want is to feel security and peace of mind, since the interest will be the same for the duration of the loan. For now, the Euribor is at its lowest figures so far, so it is unlikely to go any lower.

We must remember that, although we have seen the advantages and disadvantages, we must add and bear in mind that the perfect mortgage does not exist, but that everything depends on the economic circumstances of the moment.

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