The question every homebuyer in Spain asks is: fixed or variable mortgage? There is no universal answer. The right choice depends on your financial situation, your risk tolerance and how long you plan to stay in the property.
The fundamental difference
Fixed mortgage: you pay the same monthly installment for the entire loan term, regardless of how Euribor or interest rates evolve.
Variable mortgage: your installment changes periodically (every 6 or 12 months) based on Euribor plus a fixed spread agreed with the bank (for example, Euribor + 0.75%).
What is Euribor and why does it matter?
The Euribor (Euro Interbank Offered Rate) is the interest rate at which European banks lend money to each other. It is the reference index for most variable mortgages in Spain.
When Euribor rises, your installment rises. When it falls, your installment falls. The problem is that no one knows with certainty where it will be in the next 20 or 30 years, which is how long mortgages usually last.
Advantages and disadvantages of each type
Fixed mortgage
Advantages:
- You know exactly how much you will pay every month for the entire term
- You are not affected by Euribor increases
- It makes long-term financial planning easier
Disadvantages:
- The interest rate is usually higher than the initial rate of a variable mortgage
- Less savings during low-rate periods
- Early repayment or interest rate change fees may be higher
Variable mortgage
Advantages:
- The initial interest rate is usually lower
- You can benefit from Euribor decreases
- It typically has lower early repayment fees
Disadvantages:
- Uncertainty: your installment can increase significantly
- You need a financial cushion to absorb rate hikes
- It is harder to plan long-term expenses
Does a mixed mortgage exist?
Yes. A mixed mortgage combines both types: an initial fixed period (usually 5 or 10 years) followed by a variable period linked to Euribor. It is a middle-ground option that offers short-term stability and potential long-term savings.
What does the installment say about your payment capacity?
A common guideline is that the mortgage payment should not exceed 30-35% of your net monthly income. If you earn €2,000 net per month, a maximum recommended installment would be €600-700.
With a variable mortgage this is harder to control because the installment can change. That is why it is important to calculate what you would pay if Euribor rises 2 or 3 points from the signature moment, and make sure you could afford that increase.
The impact of your down payment
Regardless of the mortgage type you choose, your down payment has a direct effect on your conditions:
- Banks generally finance up to 80% of the appraisal value
- With more than 20% down payment you get better rates
- In addition to the down payment, you need 10-12% extra for costs: notary, registration, advisory and possible regional taxes
How does the bank decide which type to offer you?
The bank analyzes your risk profile: credit history, job stability (civil servant or permanent contract vs temporary), income, debt ratio and the property value compared to the loan (LTV).
The more solvent you are, the better terms you will be offered. Negotiating with several banks before deciding is always advisable.
Simulate your installment before choosing
The best tool for making this decision is calculating what you would pay in both scenarios. Use our mortgage calculator to simulate the monthly payment with fixed and variable rates, see the amortization table, and understand the total interest over the life of the loan.