The IS euriborthe index to which most mortgages refer, still a runaway and in the daily rate it has already marked 2.1 percent. this it will put the mortgagee in trouble variable rate they now have to review their credits.
Especially hard will be the review of the mortgages signed between 2013 and 2017when, despite interest rates being at minimums, the spreads did not fall below 2 percent because of the difficult time the banking system was going through and the closure of credit.
In short, those with variable rate mortgages will see their monthly installments skyrocket. But all is not lost. In this case still there is room for maneuver and the mortgagor can make a series of decisions to protect them from this rise.
The mortgagee’s three choices
Michael Administratormortgage expert HelpMyCash, which explains that the mortgagee has three options. “If you want complete and forever protection, you can move your interest from a variable to a constant“. In this way, the quota will be stable for the whole term, regardless of what happens to the Euribor.
On the other hand, “if you want to stay with variable interest, you can lower your differential“. In this case, the installments will not rise either when the Euribor is revised upwards.
In this case, Riera warns that “it should be remembered that it is assumed that there is a greater risk, since the fees could increase significantly in the future if the Euribor continues to rise.”
Finally, Riera points out that the mortgage could go to mixed type. “It is a suitable option if it is believed that Euribor will stabilize or fall in a few years: the quota will be stable while the Euribor will rise and it will depend on this index after a while, usually ten years”, says the expert.
The risk, in this case, is that the Euribor will remain high in the medium and long term.
Novation, subrogation or a new mortgage, what to choose?
All the operations mentioned can be carried out with newbornswith a location or by employing a new mortgageexplains Riera, but in these cases, novations and subrogations would be cheaper for the mortgagor than to contract a new mortgage, since it implies canceling the current one.
Stephanie Gonzálezpersonal finance spokesperson for Kelistowhich explains that the novation consists of negotiating a change in the terms of the mortgage with the bank. “It is the cheapest solution, but banks do not always offer the most aggressive proposals to their own clients.”
The IS location It is based on changing the bank mortgage. “It is a slightly more expensive option, but when the rate is changed from a variable to a fixed rate, the costs are subsidized by law,” recalls González.
iAhorro mortgage expert, Simone Colombelli, believes that the ideal time to cancel a variable mortgage to a fixed one is a few months ago.
Now, “depending on the operation and, above all, the profile of the client, banks can do good deals tooalthough not as good as months ago”, says Colombelli.
Colombelli also adds something important for those who are not satisfied with their current mortgage: “If you want to change because you consider your mortgage to be very bad compared to what is on the market and you have a variable with a very differential high, you must. It can also be changed for another variable.
The available sheets revolve around 0.5 percent or 0.6 percent; and “when the landline offers are better, you will be able to subrogate yourself again; subrogation is not a common thing in Spain, but it is in other European countries or the United Kingdom,” says Colombelli.
As for canceling the mortgage and signing a new one, “it could be worth it” if the offer reached is good, explains González.
Finally, González recommends taking into account the costs of the operation and not closing any option.
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