Mortgages: fixed or variable rate?

Raymundo Larraín Nesbitt, June, 11. 2018

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
11^th of June 2018

This question is hardly a good pick-up line – please don’t embarrass yourself, or me, trying it out – you will likely get slapped! However, you will surely be asking it yourself if you need a mortgage to finance your new bolthole under the sun.

With the recovery of the property market, more buyers will be asking themselves this question over the next years.

This blog post is going to explain why – at this particular moment in time – fixed rate is the superior option and why you should opt for it.

Fixed-rate mortgages

Pros

Security. You know exactly how much you will be paying every month. Interest rates are at their lowest point historically in the Eurozone. The only way is up now. If you pick a variable interest rate, you are going to be paying more and more every month which is going to add to your stress levels and mess up with your budget. Interest rates reached 5% in the peak. So paying, for example, a 2% fixed interest now is reasonable.
Cheap. Fixed rates are at their nadir. The moment interest rates rise again in the near future, fixed rates will also rise in tandem. You won’t see again for a long time the great offers that are now available on the mortgage market.
Shielded. Market volatility won’t affect you. You are going to pay the same fixed quota every month over the next 20 years regardless of Brexit, Italexit, Russian political meddling, Korean nuke boy, Trump's tantrums and whatnot.

Cons

Fixed rates are higher in the short-term than variable ones.
Variable rates would allow you to repay the loan earlier.
You pay more interests at the start.

How can our law firm assist you?

Our law firm has over 15 year’s conveyancing experience. Speak to us, we will be very pleased to discuss your matter with you and give you impartial advice. We offer the most competitive fees in the market.

Conveyancing – Buying from €995

We are specialized in conveyancing

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation and litigation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Legal services Larraín Nesbitt Lawyers can offer you

Conveyancing – Buying from €995
Conveyancing – Selling from €795
Non-Resident Income Tax (Fiscal Representation) from €90/year
Holiday Rentals Accounting Service (HRAS) from €100

Mortgage-related articles

SWAP Clauses: Have You Been a Victim? – March 2010
Lifetime Loans or Reverse Mortgages in Spain Explained – 21st February 2011
Advice to Struggling Mortgage Borrowers in Spain – 8th March 2011
Spanish Mortgage Loans: Beware of Abusive Clauses – 8th January 2012
Spanish Mortgage Loans: An Overview – 21st February 2012
Mortgage Floor Clauses Revisited (‘Cláusulas Suelo’) – 8th December 2013
Bank Repossessions in Spain– 21st February 2014
Bad Debtor’s List (‘Fichero de Morosos’) – 8th April 2014
Spanish Creditors Pursuing Debts Abroad – 8th May 2014
Dación en Pago Explained or How to Hand Back the Keys – 8th December 2014
Bank valuations vs. market value – 8th April 2018
Mortgages: fixed or variable rate? – 11th June 2018

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.