If a few years ago contracting fixed-rate mortgages was unusual, today the prevalence of these mortgage loans has spread to almost half of the total of those that are subscribed, according to the Statistics National Institute. Undoubtedly, these loans have grown due to the interest of banks in this type of product, although they have also had to see the attractive interest that buyers can find.
In fact, fixed mortgages with previously unseen interest rates can now be found on the market, comparable to those that could only be seen in variable rate loans until recently; which, despite the low levels of Euribor and the interest offered for variable mortgages, makes many consumers opt for this other option. Currently there are fixed mortgage offers with an interest rate that sometimes does not reach 1.5%, and that in some cases does not exceed 1%, if it follows the good profile of the applicant.
As its name indicates, fixed mortgages are characterized by not being subject to the evolution of the Euribor, so the same interest is maintained, and therefore the same installment, throughout the term of the loan, unless a change in the conditions is negotiated with the bank or that the mortgaged person stops benefiting from a bonus. However, this does not mean that the installment that will be paid for the fixed mortgage is not subject to any factor, since it will depend on the term that is chosen.
Higher odds, but more security
In this way, the longer the term of the mortgage contracted, the higher the interest rate to pay. In this type of loan, however, we will not find returns after 35 or 40 years, since another of the aspects that characterize fixed mortgages are the shorter terms, which range between 10 and 30 years.
With a higher interest rate and a lower repayment term, the result is that, for the same amount of capital financed, the monthly installments of the fixed loans are higher than those of the variable ones. But they have the advantage of assuring the client a monthly payment that will not give surprises during the entire time that the loan is extended.
Deciding on a fixed or variable mortgage will depend on the client’s profile, and especially on the assessment made of the security of paying the same installment every month; Although specialists especially recommend this type of loan to those who do not have a problem paying them back in a shorter period of time and who do not have a special interest in paying off the mortgage in advance.
Fixed mortgage fees
In addition to the interest rates, the opening commissions are also usually higher in the case of fixed mortgages, in which they can reach 1% of the financed capital; although, as in the case of variable loans, there are also fixed rate loans on the market without an opening fee. In addition to the opening commission, two other common commissions in the conditions of fixed-rate mortgages are those of amortization and surrogacy.
The partial or total amortization commission, which the entity applies to the client when it wants to anticipate part of the capital pending repayment, or all the remainder, is regulated by the latest mortgage law, so that it may not be 0.50% during the first five years of the term or 0.25% during the following years that the loan is extended. The same maximums are those that can be applied to the subrogation commission, which the bank will apply if the conditions of the mortgage change the debtor or the entity.
A commission that is only found in the deeds of fixed mortgages is the one that is applied for interest rate risk, which is required when the mortgaged person repays, subrogates or cancels the loan in advance, and which can range from 0 , 5% and 5% of the outstanding capital.
In addition to the interest rate and the commissions included in the loan, another aspect that will influence the amount to be paid is that of the linked products that the entity can offer to the client as a condition to improve the interest offered.
It is advisable to study well the annual cost of both these products and the commissions that may also be associated, since this calculation will allow compare more realistically the offers in fixed mortgages of the different banks.
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