The entities ensure that with these products we will be protected for a while, but from the financial comparator Good Finance they warn that, given the current scenario, signing a mixed-rate mortgage loan is not a recommended option.
Most expensive initial fees
As explained by Good Finance, mixed mortgages marketed in Spain have a fixed interest of around 2% on average that is applied between the first five and 20 years. Once this initial term has elapsed, these loans have a variable rate referenced to the Euribor, with an average differential of about 1% (although certain entities offer differentials of 0.99% or up to 0.85%).
Consequently, during that time we cannot benefit from the low price of the Euribor, which currently has a value of -0.19% (average of April 2018). Recall that variable mortgages have an interest of approximately 1% plus 1%, so the difference between the price of the installments of these two products is really pronounced.
Let’s look at it with an example. Imagine that we ask the bank for 150,000 euros, to be repaid in 25 years, and this gives us two possibilities: mortgages with a variable rate of Euribor plus 1% (with an initial fixed of 2% the first year) or to contract a mixed interest loan 2% during the first 10 years and Euribor plus 1% for the rest of the term.
As we see in the table, if the Euribor traded at an average of less than 1% during the first decade (which is the most likely scenario), the variable mortgage would always be cheaper. For example, with an average Euribor at 0.5%, with the variable rate loan, we would pay some installments of 601.19 euros, while with the mixed mortgage we would have to pay monthly payments of 635.78 euros.
Its stability expires
The mixed mortgage, therefore, would only be cheaper than the variable if there were a large rise in the Euribor in the short term, in which case we would be protected by the initial fixed. However, after the period has elapsed at a fixed rate, the interest would be referenced to this index, so it should be lowered again so that the fees are not increased.
This is a carambola that is very difficult to end up giving, so from Good Finance they advise, if what you are looking for is stability, opt directly for a fixed mortgage. These products are somewhat more expensive than a year ago, but they still offer very attractive types.
Two of the most prominent examples are the BBVA Fixed Mortgage, whose 20-year interest is only 1.95%, and the Bankinter Fixed Mortgage, at 2.15% at 20 years. Also interesting are some offers such as the Fixed Mortgage Mortgage.com, which despite having a somewhat higher interest (2.80% at 20 years), does not have commissions or related products, which represents a considerable saving for the holder.