Changing from variable to fixed mortgage, is it worth it?

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The Euribor skyrockets in the first four months of the year and, after six years in negative, returns to positive values, a rise that will be noted in the installments of variable mortgages
The change has a cost and it is necessary to analyze whether the savings achieved with the improvement of the conditions compensates the expense that must be disbursed for the operation

change variable to fixed mortgage In times of uncertainty like the current one, stability is a value that trades on the rise. Above all, in what refers to the domestic economy and the expenses that must be faced each month. For example, the mortgage, protagonist in the accounts of many households, for the part of income that must be dedicated to it and for the long period of time during which it must be done. In fact, If you asked for a variable mortgage a few years ago, you may have begun to worry about the possibility that the Euribor will continue to rise and you are planting switch to a fixed-rate mortgage to gain security, since, by paying a constant fee, you can forget about the oscillations of this reference indicator.

And it is that the probability that the European Central Bank will raise rates this year to deal with the current inflationary spiral is becoming more and more substantial. If so, this decision will have its effect on the Euribor, the main reference index for variable mortgages, which, moreover, after six years in the negative, has begun to recover. In fact, in the first four months of 2022 it has skyrocketed and has returned to positive levels. Thus, it has gone from -0.477% in January to 0.013% in April. This means that those mortgaged at a variable rate will have to face significantly more expensive installments when their interest rate is updated.

In this sense, surely more than one has wondered if he was wrong in his decision and if now is the time to take out a fixed-rate mortgage. However, it is advisable not to rush and, before taking the step, it is necessary to take into account some factors. At Rastreator, we explain What are the advantages and disadvantages of this operation, how should you do it and how much can it cost you?.

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Advantages of moving from a variable mortgage to a fixed one

If you are considering cchange your variable mortgage for a fixed oneyou should know that the operation has its advantages. Thus, in favor of change, factors such as:

Greater security. It is a simpler financing model for the mortgaged, since, at all times, you will be clear about the costs of your mortgage loan. Every month you will pay the same thanks to the fixed fee, with which you will gain in security and certainty.
more stability. By paying the same installment every month, you will get rid of the consequences of future rises in the Euribor and you will be able to better plan your payments and expenses.
competitive rates. Today, the fixed-rate mortgage offer has expanded considerably and banks still offer loans of this type at an attractive interest rate, which will be maintained until you finish paying. In fact, it is possible to find fixed-rate mortgages with a TIN below 1.35%.

Disadvantages of changing a variable mortgage to a fixed one

However, the change from a variable mortgage to a fixed one also has its disadvantages:

You will not be able to benefit from the decreases registered by the Euribor and, therefore, a reduction in your fee, with the consequent savings for your pocket.
Generally, interests that financial institutions offer you to variable mortgages are lower than for the fixed ones and the requirements are also usually lower.

How to change from a variable mortgage to a fixed one

If you are clear about the pros and cons of both types of mortgage and you consider that changing your variable rate loan for a fixed one is a good alternative, the first thing you will have to do is analyze the market to find out the most interesting offers from banks and which ones you can aspire to. Once this is done, you have to know that you have several options to perform the operation:

With a novationnamely, negotiating and agreeing on new conditions with your own bank. This formula allows you to renegotiate the conditions of the mortgage that you signed back in the day to make them more favorable. Specifically, as long as you reach an agreement with your financial institution, it allows you to make changes to the mortgage loan with respect to the interest rate applied, the pending amount (if you need to have more money), the repayment period or the holders of the loan. To carry out the novation, the bank will study your particular case and decide whether to agree to the change.
Through subrogationOr what is the same, change the mortgage to another bank to agree to move it to a fixed rate. In this case, you cannot modify the amount or term of the current mortgage, but you can modify the conditions, such as changing from a variable rate to a fixed rate or improving the interest you have to pay, obtaining more advantageous economic conditions than in your entity. .
With the cancellation of the variable mortgage credit you currently have and subscribing a new one at a fixed rate. It is the most expensive option, since it is necessary to pay the expenses of establishing the new credit plus those associated with the cancellation of the old one. Therefore, unless, in addition to the interest rate, you want to increase capital and repayment years, it is not the most recommended option.

In this sense, the ideal is state your desire to move from a variable rate to a fixed rate both to the bank with which you have the mortgage and to other entities. Thus, you will have more offers and you will be able to negotiate better. In any case, depending on the formula you choose, the expenses and the procedures that you will have to do are different. Thus, if your bank agrees to change the conditions of your mortgage and make you an offer equal to the most attractive that you have found in another entity, it is worth accepting it. And it is that a novation entails less expenses and procedures than a subrogation. You will only have to formalize the modification of your mortgage before a notary.

However, if the proposal made by your bank is not as good as the one you have seen in another entity, the first thing you will have to do is analyze if it is economically worthwhile. That is, if the savings that you are going to achieve by improving the conditions compensates the expense that you are going to have to disburse for the operation. If so, and you decide to make a subrogation, you will have to submit all the documentation required to apply for a mortgage.

How much does it cost to go from a variable mortgage to a fixed one?

as you can imagine, the change from a variable mortgage to a fixed one is not free. However, the expense that it may entail will depend on the conditions that you have agreed in your contract and the formula that you use to do so.

Thus, if you decide to stay with your bank and make a renewal to change your variable mortgage to a fixed one, you will have to pay the fee for modification/novation. The new mortgage law limits it to 0.15% during the first three years of the life of the mortgage. After the fourth year, your bank cannot charge you anything. Nor will you have to pay any notary, registration and administrative expenses, because it is the bank that assumes them.

yes stop change the type of your mortgage from variable to fixed If you choose to take it to another bank, that is, make a subrogation, as occurs in the novation, you will have to pay a maximum of 0.15% if it is in the first three years of the life of the loan. From the fourth, the bank will not be able to charge you anything either. What you will have to pay is the appraisal of the house. However, if you decide on this alternative, remember that interest is not everything. Also look at the price of the products you have to hire to get that interest and in the commissions that the new bank can apply to you.

Is it worth changing your variable mortgage to a fixed one?

The answer to yes It is worth changing from variable to fixed mortgage, it will depend, to a large extent, on the conditions of your current mortgage. Thus, in the last five years, the average exit interest of the contracted variable mortgages has been 2.34%, a percentage that includes the differential applied by the banks plus the Euribor, which has always been in negative territory. This interest is higher than that of some fixed mortgages of the moment. Therefore, if this is the case, and taking into account that the Euribor has begun to recover and has already entered positive levels, it is likely that it will be profitable for you to switch to a fixed one. In addition, you would also gain peace of mind. Of course, if you have decided to change, do not delay in doing so in order to take advantage of the attractive fixed rates that the market still offers.

In any case, if you are still looking for the most attractive offer to convert your variable mortgage to a fixed one, visit the Rastreator mortgage comparator. In a matter of seconds, you will know the details of the best fixed-rate mortgages that adapt to your financial situation and, in addition, you will be able to use their advice service and clear up your doubts.