Navigating the Euribor: Strategies to Reduce Mortgage Payments and Financial Recommendations

The current economic panorama, with inflation at levels never seen before that is skyrocketing pricesis particularly affecting the euriborwhich has led to people with variable mortgages experiencing a increase in your fees monthly in a significant and almost unaffordable way for many families. This increase, which is directly linked to the euribor one year has passed negative rates at 4.160% in October, which has generated complications in the adaptation of family budgets. Faced with this challenge, the Organization of consumers and users (OCU) is offering strategies to reduce the mortgage payment, ensuring that it is possible save up to 100 euros per month through renegotiation with the bank.

Outlook on mortgages

The current financial context poses the dilemma between opting for a fixed or variable mortgage, a choice determined by individual needs and the evolution of interest rates. Although the European Central Bank has announced that there will be a pause in raising rates, it is noted that no reductions are anticipated in the short term, according to the OCU association. Although the Euribor could have reached its highest point, forecasts suggest that the decreases will not be immediate or significant.

These are some strategies to reduce your mortgage payment:

1. Negotiate new conditions:
   • Through a novation with the entity or subrogation to another bank, the conditions of the mortgage can be renegotiated.
   • This process, which is considered “simple and cheap” by the OCU, involves reduced costs, such as an appraisal (around 300 euros) and an early cancellation fee (0% to 2%).
2. Change from variable to fixed mortgage:
   • Considering the current level of the Euribor, switching to a fixed mortgage can result in a immediate savings.
   • The OCU highlights that a mortgage referenced to Euribor +1 pays an interest of 5.16%, compared to 3.05% for the best fixed mortgage without links, which can generate a monthly savings of more than 100 euros for an outstanding capital of 100,000 euros.
3. Lower the differential:
   • Changing to another variable mortgage can be beneficial from a 0.25% reduction in the differential over the Euribor.
   • The OCU presents an example where a reduction in the differential results in a monthly saving of 150 euros in the first year and 25 euros per month in subsequent years.
4. Opt for a mixed mortgage:
   • This option combines stable installments during the first years with the possibility of taking advantage of possible drops in the Euribor in subsequent years.

OCU recommendations

• The FATHER advises studying any novation offer from the old entity and negotiating commissions without fear.
• It is alerted about possible new obligations, such as the contracting of additional insurance, by communicating the change to the original entity.
• The early cancellation fee, according to the OCU, is suspended until the end of the year according to Royal Decree-Law 19/2022, and should remain exempt at least as long as the Euribor does not decrease.

In summary, the FATHER offers practical strategies so that holders of variable mortgages can face the current economic challenges, taking advantage of the possibility of reducing your monthly payments and thus optimizing your budgets. The renegotiation of conditions and the consideration of different types of mortgages are key tools in this financial management process.

Although It is not the solution that many mortgage holders would like to have.these recommendations can be a factor claveespecially for those families with a tight budget who are seeing how the The price of their mortgages does not allow them to make ends meet. The Euribor situation is expected to stagnate in the coming months, since it is expected not to rise, but it is not expected to fall either.