Mortgages in the face of rising Euribor: what to do?
If you have a variable mortgage that is revised with the Euribor you will have seen how over the last few months your repayments have increased a lot. It is considered that, on average, mortgages have increased by 300 euros. The month of July closed with a rise of 4.14%. Faced with this situation and the prospect that the interest rate will continue to rise, people who have taken out mortgages are asking themselves: what do I do, do I amortise, do I reduce the instalment or the term of the mortgage, do I request a change to a fixed-rate mortgage? In this article we tell you all the options.
Since last year in the euro zone we are seeing how the price of electricity, gas or money (i.e. our mortgage) is increasing. To control this price increase, the European Central Bank increases the interest rates so that the credits granted by the banks are more expensive, consumption is less and prices go down.
What do I do with my mortgage in the face of the Euribor rise?
Interest rates are likely to continue to rise over the coming months, so to reduce the impact on your finances, you have several options:
- Full or partial repayment. If you have savings, this is one of the simplest solutions. In this case there are two alternatives: reduce the instalment to pay less each month or reduce the length of the mortgage, which means you will pay less interest in the long term. Remember that if you bought your home before 2013 you can deduct the amortisation you make in your personal income tax return.
- Change your mortgage to another bank. You can check with other banks to see if they will improve the conditions of your mortgage. It is important that you read the small print and the new conditions to check if the change really favours you.
- Renegotiate with your bank. Another option is to negotiate with your bank to improve the conditions of your mortgage loan. You can negotiate a fixed interest rate instead of a variable one (see if the change is favourable) or a reduction in the applicable interest rate.
In addition to the above, it is advisable that you have foresight and know how a rise in the Euribor may affect your mortgage so that you can manage your expenses and income according to this rise. To calculate the rise, you should consider what you have agreed with the bank in your mortgage loan (review date and how the review will be carried out). The calculation is influenced by the published Euribor, the outstanding capital and the remaining mortgage term.
At the Bank of Spain you can use a simulator to calculate the instalment to be paid on a mortgage loan.
In short, the Euribor may continue to rise and mortgages will become more expensive, which will affect family economies even more. If you need help to negotiate your mortgage, do not hesitate to contact us and we will help you.
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