Fixed Rate Mortgage Loans

When taking out a fixed rate mortgage loan the applicant ensures the repayments are fixed during the life of the contract. This gives certainty to the applicant as to his future outgoings, allowing him to plan in advance his finances.

There is a downside to these loans. They tend to be very expensive in comparison to variable mortgage loans. Banks are no risk takers and will charge for the security they give. Therefore, fixed is synonymous to high expense.

Approximately ten percent of all mortgage loans are taken out on this basis. However, non-resident applications are currently not being considered for these types of loans, and where they are, the expense makes them not a good option.


Fixed or variable interest rate loans?

Ninety per cent of mortgage loans contracted in Spain are so on a variable interest rate basis. Only the remainder ten percent are contracted on a fixed interest rate basis. The main reason for this being is that variable loans based on for example the Euribor work out at least 2 points cheaper than fixed loans.