Fixed, variable and mixed mortgages and how Euribor works

Terms used

• Euribor — The Euribor is the European interest-rate index, usually the 12-month one, that sets the rate on most variable mortgages.
• Diferencial — The diferencial is the fixed margin the bank adds to Euribor to set your variable rate.
• TIN — The TIN is the nominal yearly interest rate on the loan, before any fees.
• TAE — The TAE is the yearly cost of the loan, including interest, mandatory fees and linked costs, used to compare offers.

Key rules

• Affordability: Pick the structure whose payment you could still carry if rates rose by one or two percentage points.
• Fixed: A fixed rate keeps your payment constant but usually starts higher.
• Variable: A variable rate is Euribor plus the diferencial, and your payment is recalculated at each revision.
• Mixed: A mixed rate is fixed at first, then becomes variable, so the risk comes later.
• Comparing offers: Compare offers on the TAE, which includes fees, rather than on the TIN.

Which structure should you pick?

Choose the structure whose worst case you can pay. A fixed rate removes the risk of rising payments. A variable rate is cheaper to start but can cost much more later. A mixed rate sits between the two. The comparison below sets them side by side.

Fixed rate

The interest rate stays the same for the whole term, so your payment never changes. The starting rate is usually higher than on a variable offer, and early-repayment fees may be higher too. It suits you if you have a tight budget or want certainty.

Variable rate

Your rate is a reference index plus a fixed margin the bank adds, the diferencial. The usual index is the 12-month Euribor. For example, if Euribor is 2.5% and the diferencial is 1%, your rate is 3.5% until the next revision. These figures are only an illustration, not current rates.

• Most variable mortgages are revised every 12 months. Some are revised every 6.
• At each revision the bank recalculates your payment on the balance you still owe and the time remaining.
• If Euribor rises, your payment rises. If it falls, your payment falls.
• Your contract says which Euribor value applies. It is often the monthly average of the month before or two months before the revision date.
• If Euribor is negative, the formula still applies, but some contracts set a minimum rate (a floor). Check yours.

A variable rate suits you if you have an income cushion or plan to repay early. Each extra percentage point makes a noticeable difference on a long loan.

Mixed rate

You pay a fixed rate for an initial period, often 1 to 10 years. After that the loan becomes variable, with Euribor plus the diferencial. You get certainty at the start, then take on the same risk as a variable loan. It suits you if you want a stable first few years, for example while you expect your income to grow, or if you plan to sell or repay before the fixed period ends.

Test your choice

Before you decide, ask the bank for the payment at a rate 1 and 2 percentage points higher than today's. If the higher payment would strain your budget, lean towards fixed, or towards a mixed loan with a long fixed period.

TIN versus TAE

Compare offers on the TAE, not the TIN.

• The tipo de interés nominal (TIN) is the yearly interest rate on the loan, without fees.
• The tasa anual equivalente (TAE) adds the mandatory costs, such as opening fees and any linked products or insurance that count towards the cost. It also takes the timing of payments into account.
• The TAE is higher than the TIN whenever there are fees.

On a variable loan, the TAE assumes today's index stays the same. It does not show what happens if Euribor rises, so do the stress test above.

Rates, terms and age

Rates depend on the bank, how much you borrow compared with the property's value, your profile and linked products such as a payroll account or insurance. Fixed rates have generally been near or somewhat above variable offers, with mixed rates in between. Non-residents typically get less favourable terms and borrow a smaller share of the value.

The usual maximum term is 30 years. Some banks go to 35 or 40, usually for younger borrowers. Non-residents are often limited to 20 to 25 years. Banks usually want the mortgage to end by about age 75, and some allow up to 80, so older applicants get shorter terms.

Euribor changes with European interest-rate policy, so a value you remember will be out of date. Check the latest figure with the Bank of Spain, and compare current offers from several banks.

The timeline and FAQ below cover the revision steps and common questions.

Fixed, variable and mixed mortgages compared

The main trade-off is certainty against starting cost: fixed gives the most certainty, variable usually starts cheapest, and mixed sits between the two.

What to watch for

• Small rate changes add up. On a long loan, each extra percentage point raises the monthly payment noticeably. Test any variable or mixed offer against a higher rate before you accept it.
• Early repayment limits are for newer loans. The caps above apply to consumer home mortgages signed after June 2019. The same rules apply to everyone who signs a mortgage now.
• Compare like for like. Line up offers on the same term and the same linked products. Also compare fees, bonuses that depend on those products, and the early repayment terms.
• Rates move. Check current figures with the Bank of Spain's published statistics and with the banks' own offers.

Timeline and deadlines

• Fixed-rate mortgage: the same rate applies for the whole term: from signing until the loan ends

• The bank takes the Euribor value your contract names, often the monthly average of the month before or two months before the revision: before each revision date

• Your variable rate is reset to Euribor plus the spread and the payment is recalculated: every 12 months on most mortgages, every 6 months on some

• The new payment stays the same until the next revision: for 12 months, or 6 months if your mortgage is revised twice a year

Frequently asked questions

What is the longest mortgage term I can get in Spain?

The usual longest mortgage term in Spain is 30 years, and some banks offer 35 or 40 years, usually to younger borrowers.

Does my age limit how long my mortgage can run?

Yes, banks usually want the mortgage to end by the time you are about 75, so older applicants get shorter terms. Some banks allow up to 80, and a few set different limits for non-residents.

Which Euribor value sets my variable rate at each revision?

Your contract states which Euribor value applies, often the monthly average of the month before or two months before the revision date. The usual reference is the 12-month Euribor.

Does the variable rate formula still work if Euribor is negative?

Yes, the index plus spread formula still applies when Euribor is negative, but some contracts set a floor below which the rate cannot fall. Look for a floor clause in your offer.

Does the TAE show me what happens if Euribor rises?

No, the TAE on a variable mortgage offer assumes the current index stays constant, so it does not show future rises. Work out your payment at a higher rate yourself before you choose.